- Description
ACC 291 Week 3 Practice Quiz
Practice Question 01
The time period for classifying a liability as current is one year or the operating cycle, whichever is
| probable. |
| longer. |
| shorter. |
| possible. |
Practice Question 05
Which one of the following is not a typical current liability?
| Mortgages payable |
| Salaries payable |
| Current maturities of long-term debt |
| Interest payable |
Practice Question 10
Buttner Company borrows $88,500 on September 1, 2017, from Harrington State Bank by signing an $88,500, 12%, one-year note. How much is accrued interest at December 31, 2017?
| $10,620 |
| $2,655 |
| $3,540 |
| $4,425 |
Practice Question 25
How is the market value of a bond issuance determined?
| By adding the face value of the principal amount to the stated value of the interest payments. |
| By computing the present value of the principal. |
| By computing the present value of the interest payments. |
| By adding the present value of the principal amount to the present value of the interest payments. |
Practice Question 30
If the contractual rate of interest is lower than the market rate of interest, bonds will sell at a premium.
| True |
| False |
Practice Question 35
What is the effect of amortizing a bond discount?
| It decreases bond interest expense. |
| It increases the carrying value of the bonds. |
| It decreases the maturity value of the bonds. |
| There is no effect on the bond interest expense. |
Practice Question 31
Cuso Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate?
| The contractual interest rate exceeds the market interest rate. |
| The contractual interest rate and the market interest rate are the same. |
| The market interest rate exceeds the contractual interest rate. |
| No relationship exists between the market and contractual rates. |
Practice Question 34
When a bond is sold at a premium, at what amount is it reported on the balance sheet?
| Premium value |
| Market value |
| Interest value |
| Carrying value |
Practice Question 36
Tanner, Inc. issued a 10%, 5-year, $100,000 bond when the market rate of interest was 12%. At what value will the bond sell?
| Face value |
| A premium |
| A discount |
| Par |
Practice Question 46
Which of the following is not a commonly used method of presenting current liabilities on the balance sheet?
| Listing currently maturing long-term debt first. |
| Listing current debt in the order of oldest first and then chronologically. |
| In order of magnitude or size. |
| In order of their maturity. |