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ACC 206 Week 7 Quiz Chapter 15

ACC 206 Week 7 Quiz Chapter 15

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ACC 206 Week 7 Quiz Chapter 15 -

Multiple Choice Question 110         

In a lease contract,

  • the owner of the property is called the lessee.
  • the presence of a bargain purchase option indicates that it is a capital lease.
  • the renter of the property is called the lessor.
  • there is always a transfer of ownership at the end of the lease term.


Multiple Choice Question 51             

A bondholder that sends in a coupon to receive interest payments must have a (n)

  • mortgage bond.
  • unsecured bond.
  • serial bond.
  • bearer bond.


Multiple Choice Question 94           

If bonds can be converted into common stock,

  • the bondholder may benefit if the market price of the common stock increases substantially.
  • they will be converted only if the issuer calls them in for conversion.
  • they will carry a higher interest rate than comparable bonds without the conversion feature.
  • they will sell at a lower price than comparable bonds without a conversion feature.


Multiple Choice Question 93

If there is a loss on bonds redeemed early, the

  • bonds’ carrying value was greater than the redemption price.
  • bonds’ carrying value was less than the redemption price.
  • loss is debited to Interest Expense, as a cost of financing.
  • loss is debited directly to Retained Earnings.


Multiple Choice Question 57             

Bonds will always fall into all but which one of the following categories?

  • Secured or unsecured
  • Callable or convertible
  • Term or serial
  • Registered or bearer



Multiple Choice Question 63

The following exhibit is for Target bonds.

Bonds             Close               Yield               Volume           Net Change


 8 1/8 17          100¼               8.2                   35                    +7/8

On the day of trading referred to above,

  • no Target bonds were traded.
  • bonds with market prices of $3,500 were traded.
  • at closing, the selling price of the bond was higher than the previous day's price.
  • the bond sold for $100.25.


Multiple Choice Question 106           

Harris Company borrowed $800,000 from Liber Bank on January 1, 2013 in order to expand its mining capabilities. The five-year note required annual payments of $203,013 and carried an annual interest rate of 8.5%. What is the balance in the notes payable account at December 31, 2014?

  • $659,651
  • $518,498
  • $664,000
  • $800,000


Multiple Choice Question 83             

Rikki Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2014. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Rikki uses the straight-line method of amortization.

What is the amount of interest Rikki must pay the bondholders in 2014?

  • $11,200
  • $12,000
  • $13,200
  • $10,800


Multiple Choice Question 116           

In a recent year Chandler Corporation had net income of $150,000, interest expense of $40,000, and tax expense of $20,000. What was Chandler Corporation's times interest earned ratio for the year?

  • 3.75
  • 4.75
  • 5.25
  • 4.25


Multiple Choice Question 118           

The adjusted trial balance for Otam Corp. at the end of the current year, 2014, contained the following accounts.

5-year Bonds Payable 8%                                        $1,500,000

Interest Payable                                                         50,000

Premium on Bonds Payable                                     150,000

Notes Payable (3 mo.)                                               40,000

Notes Payable (5 yr.)                                                 145,000

Mortgage Payable ($10,000 due currently) 300,000

Salaries and Wages Payable                                     18,000

Taxes Payable (due 3/15 of 2015)                            25,000

The total long-term liabilities reported on the balance sheet are

  • $2,095,000.
  • $2,085,000.
  • $1,945,000.
  • $1,935,000.


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