107.Under a defined contribution pension plan,
a.
the annual contribution is based on estimated future benefits.
b.
accounting for annual pension expense is simple.
c.
the pension expense account must be determined by actuarial calculations.
d.
the employer guarantees the employee certain benefits upon retirement.
108.Under an operating lease, the lessee
a.
credits Capital Lease Obligations.
b.
debits Rent Expense.
c.
records depreciation on the leased asset.
d.
debits Capital Lease Equipment.
109.Under a capital lease, the lessee does not record which of the following?
a.
Depreciation on the leased asset
b.
Rent expense
c.
Capital lease obligations
d.
Capital lease assets
110.Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the mortgage will include a
a.
debit to the Mortgage Payable account for $600,000.
b.
credit to the Cash account for $600,000.
c.
debit to the Cash account for $600,000.
d.
credit to the Mortgage Payable account for $600,000.
111.Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a
a.
debit to the Cash account for $5,500.
b.
debit to the Interest Expense account for $5,000.
c.
credit to the Mortgage Payable account for $5,500.
d.
credit to the Cash account for $5,000.
112.Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage at the end of the first month will be
a.
$595,000.
b.
$599,500.
c.
$600,000.
d.
$594,500.
113.Under a defined benefit pension plan,
a.
retirement payments are based on the amount accumulated in the pension fund.
b.
actuarial computations are unnecessary.
c.
the employer guarantees the employees certain benefits upon retirement.
d.
accounting for annual pension expense is simple.
114.Which of the following is not an advantage of issuing long-term debt?
a.
The interest is tax-deductible
b.
Increased earnings accrue to the stockholders
c.
The stockholders do not relinquish any control
d.
The risk of becoming bankrupt is reduced
115.All of the following are advantages of issuing bonds rather than stock except
a.
payment of bond interest is not required.
b.
bond interest is tax-deductible.
c.
financial leverage.
d.
bondholders do not have voting rights.
116.Which of the following statements is not true about trading on the equity?
a.
It is another phrase for financial leverage
b.
It will increase the interest a corporation must pay
c.
It can become a disadvantage to a corporation
d.
It will increase the number of shares of stock owned
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