Question :
61. A firm classifies liabilities which fall due within the operating : 1245693
61. A firm classifies liabilities which fall due within the operating cycle, usually one year, as
A. a current liability.
B. a long-term liability.
C. a noncurrent asset.
D. part of shareholders’ equity.
E. a contingent liability.
62. In return for promising to make future payments, a firm receives cash or other assets with a measurable cash-equivalent value. The firm records a long-term liability for that amount and the book value of that borrowing at any time equals the
A. future value of all the then-remaining promised payments using the historical market interest rate applicable at the time the firm originally incurred the liability.
B. current value of all the then-remaining promised payments using the historical market interest rate applicable at the time the firm originally incurred the liability.
C. present value of all the then-remaining promised payments using the market interest rate applicable at the current time.
D. present value of all the then-remaining promised payments using the historical market interest rate applicable at the time the firm originally incurred the liability.
E. future value of all the then-remaining promised payments using the using the market interest rate applicable at the current time.
63. In return for promising to make future payments, a firm receives cash or other assets with a measurable cash-equivalent value. The firm records a long-term liability for that amount and determines the market interest rate by finding the
A. internal rate of return.
B. external rate of return.
C. applicable federal rate.
D. prime lending rate published in The Wall Street Journal.
E. federal funds rate.
64. The interest rate that discounts a series of future cash flows to its present value is called the
A. internal rate of return.
B. external rate of return.
C. creditors rate of return.
D. prime lending rate published in The Wall Street Journal.
E. federal funds rate.
65. Borrowers who retire long-term liabilities debit the liability account for its current book value, credit Cash, and recognizes any difference on the retirement of the debt as a
A. gain when book value exceeds cash disbursement (credit).
B. gain when cash disbursement exceeds book value (credit).
C. loss when book value exceeds cash disbursement (debit).
D. a financing loss (debit).
E. cannot be determined from the above information.
66. Bonds whose indentures contain a provision which requires the issuing firm to make a provision for partial early retirement of the bond issue are sinking fund bonds and _____ bonds.
A. callable bonds
B. refunded bonds
C. serial bonds
D. convertible bonds
E. zero coupon bonds
67. U.S. GAAP requires that all long-term monetary liabilities appear on the balance sheet at the
A. future value of the present cash payments.
B. total value of the future cash payments.
C. imputed value of the future cash payments.
D. present value of the future cash payments.
E. historical cash proceeds from debt issuance.
68. In historical cost accounting, the discounting process uses the original interest rate appropriate for the particular borrower at the time it incurred the obligation. That rate will have depended on the amount and terms of the borrowing arrangement as well as the risk that the borrower will default on the obligations. The rate is known as the
A. prime interest rate.
B. explicit interest rate.
C. imputed interest rate.
D. federal funds rate.
E. applicable federal rate.
69. A document or agreement giving the terms of the bond and the rights and duties of the borrower and other parties to the contract that provides some protection to the bondholders and typically limits the borrower’s right to declare dividends, to make other distributions to owners, and to acquire other businesses is known as a
A. bond sinking fund agreement.
B. serial bond funding agreement.
C. bond indenture.
D. creditor indenture.
E. business trust indenture.
70. The most common type of corporate bond, except in the railroad and public utility industries, that carries no special collateral and the borrower issues it on the general credit of the business is called a
A. sinking fund bond.
B. serial funded bond.
C. debenture bond.
D. convertible bond.
E. zero coupon bond.
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