Question : 67. Which of the following represents the largest amount withheld from : 1229370

 

 

67. Which of the following represents the largest amount withheld from employees’ paychecks? 
A. Workers’ compensation insurance.
B. Social Security and Medicare.
C. Personal income taxes.
D. Group health insurance.

 

 

68. When a corporation has a right to redeem bonds in advance of the maturity date, the bond is considered a: 
A. Convertible bond.
B. Callable bond.
C. Junk bond.
D. Debenture bond.

 

 

69. Sinking funds usually appear on the balance sheet as: 
A. Current asset.
B. Long-term investment.
C. Current liability.
D. Appropriation of retained earnings.

 

 

70. A bond that is not secured is also known as: 
A. A sinking fund.
B. A mortgage.
C. A debenture.
D. A junk bond.

 

 

71. Management has both the intent and the ability to refinance a liability maturing in four months by taking out a new loan at the due date, which would not be due for several years. How would this situation be reported in financial statements prepared as of today’s date? 
A. The original liability is classified as current, with a footnote describing management’s plan for refinancing.
B. The original liability is classified as current and the new loan is reported as a long-term liability.
C. The original liability is classified as long-term; the new loan is not included in liabilities at this date.
D. The original liability need not be reported at all; only the new loan is reported as a long-term liability.

 

 

72. The pension expense of the current period is equal to: 
A. Amounts paid to retired workers during the current period.
B. The estimated future pension benefits earned by today’s workers during the current period.
C. The present value of the estimated future pension benefits earned by today’s workers during the current period.
D. Cash payments made during the period to the trustee of the pension plan.

 

 

73. When an installment note is structured as a “fully amortizing” loan with equal monthly payments (such as a traditional mortgage): 
A. The portion of each payment allocated to interest expense is the same each month.
B. The sum of the monthly payments is equal to the amount of the installment note (mortgage).
C. The difference between the sum of all monthly payments and the principal amount of the note constitutes interest.
D. The portion of each payment allocated to repayment of principal decreases each month as the mortgage is paid off.

 

 

74. In relation to a bond issue, the role of the underwriter is to: 
A. Guarantee payment to bondholders of both the periodic interest payments and the maturity value.
B. Purchase the entire bond issue from the issuing corporation and then sell the bonds to the public.
C. Represent the interests of the bondholders and, if necessary, to take legal action on their behalf.
D. Maintain a subsidiary ledger of individual bondholders and mail out the periodic interest checks.

 

 

75. If a bond is issued at par and between interest dates: 
A. The cash received by the corporation will be less than the face value of the bond.
B. The cash received by the corporation will be greater than the face value of the bond.
C. The cash received by the corporation will be the same as the face value of the bond.
D. Interest receivable will be debited.

 

 

76. The term “junk bonds” describes bonds with: 
A. Low interest rates.
B. Indefinite maturity dates.
C. Low maturity values.
D. High risk.

 

 

 

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