Question : 114. When bonds retired before their maturity date: a.GAAP has : 1256012

114. When bonds are retired before their maturity date:

a.GAAP has been violated.

b.The issuing company will always report a non-operating gain.

c.The issuing company will always report a non-operating loss.

d.The issuing company will report a non-operating gain or loss.

115. The Viper retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The entry to record the retirement will include:a. A credit of $6 million to a gain account.b. A debit of $6 million to a loss account.c. No gain or loss on retirement.d. A credit to cash for $42 million.

116. The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. The entry to record the retirement will include:a. A debit of $3 million to a loss account.b. A credit of $3 million to a gain account.c. No gain or loss on retirement.d. A credit to cash for $18 million.

117. The Titan retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $23 million. The entry to record the retirement will include:a. A debit of $5 million to a loss account.b. A credit of $5 million to a gain account.c. No gain or loss on retirement.d. A credit to cash for $18 million.

118. Which of the following statements is correct?

a.

Bonds are always issued at their face value.

b.

Bonds issued at more than their face value are said to be issued at a discount.

c.

Bondholders must hold their bonds until maturity to receive cash for their investment.

d.

None of the other answers are correct.

119. In each succeeding payment on an installment note:

a.The amount that goes to decreasing the carrying value of the note increases.

b.The amount that goes to decreasing the carrying value of the note decreases.

c.The amount that goes to decreasing the carrying value of the note is unchanged.

d.The amounts paid for both interest and principal increase proportionately.

120. In each succeeding payment on an installment note:

a.The amount of interest expense increases.

b.The amount of interest expense decreases.

c.The amount of interest expense is unchanged.

d.The amounts paid for both interest and principal increase proportionately.

121. The entry to record a monthly payment on an installment note such as a car loan:

a.Increases expense, decreases liabilities, and decreases assets.

b.Increases expense, increases liabilities, and increases assets.

c.Increases expense, decreases liabilities, and increases assets.

d.Increases expense, increases liabilities, and decreases assets.

122. How does the amortization schedule for an installment note such as a car loan differ from an amortization schedule for bonds? 

a.   The final carrying value is zero in an amortization schedule for an installment note.

b.   The final carrying value is zero in an amortization schedule for bonds.

c.   The final carrying value is zero in both amortization schedules.

d.   The final carrying value is not zero in either amortization schedule.

123. Which of the following leases is just like a rental? 

a.   An operating lease.

b.   A capital lease.

c.   Both an operating and a capital lease.

d.   Neither an operating lease nor a capital lease.