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ACC Test 5
10 and 11
| Question | Answer |
|---|---|
| A bond is issued at _____ when the market rate of interest is the same as the contract rate of interest | par value |
| When a bond sells at a _____, the contract rate is below the market rate | discount |
| When a bond sells at a discount, the contract rate is _____ the market rate | below |
| When a bond sells at a _____, the Discount on Bonds Payable account is a contra liability | discount |
| When a bond sells at a discount, _______ account is a contra liability | The Discount on Bonds Payable |
| When a bond sells at a ____, amortizing a bond discount allocates a portion of the total discount to interest expense each interest period | discount |
| When a bond sells at a _______, interest expense is higher than the cash paid | discount |
| When a (bond sells at a discount, interest expense) is ______ than the cash paid | higher |
| When a bond sells at a ________, the contract rate is (above) the market rate | premium |
| When a (bond sells at a premium), the contract rate is ______ the (market rate) | above |
| When a bond sells at a ________, the (Premium on Bonds Payable) account is an adjunct (liability account) | premium |
| When a (bond sells at a premium), the _______ account is an adjunct (liability account) | Premium on Bonds Payable |
| When a bond sells at a ________, (Amortizing) a bond premium allocates a portion of the total premium to (interest expense each interest period) | premium |
| When a (bond sells) at a ________, (Interest expense) is (lower) than the cash paid | premium |
| When a (bond sells at a premium, Interest expense) is ______ than the cash paid | lower |
| Market value (price) is shown as a ________ of par (face) value | percentage |
| Bonds issued at 103 ½ means that they are sold for _____ | 103.5% of par value |
| Bonds issued at 95 means that they are sold for _____ | 95% of par value |
| ______ is the (legal contract) between the bond issuer and the bondholders | Bond indenture |
| ______ is the (document) which (bondholders receive) that is evidence of the issuing company’s debt | Bond certificate |
| A _______ of (bond financing) is, bonds do not affect (owner control) | Advantage |
| A _______ of (bond financing) is interest on bonds is (tax deductible) | Advantage |
| A _______ of (bond financing) is bonds can (increase return on equity) | Advantage |
| (A company that earns a higher return) with borrowed funds than it pays in interest on those funds increases its return on equity is an example of a ____ for (bond financing) | Advantage |
| A _______ of (bond financing) is bonds pay (periodic interest) and require the repayment of par value at maturity | Disadvantage |
| A _______ of (bond financing) is (bonds can decrease) return on equity | Disadvantage |
| (A company that earns a lower return) with borrowed funds than it pays in interest on those funds decreases its return on equity is an example of a ____ for bond financing | Disadvantage |
| The _____ at (maturity always equals) the par value of the bond | Carrying value of bonds |
| If an (issuer sells) bonds at a (discount the carrying value) ______ from the issue price to the par value over the bond’s term | increases |
| If an (issuer sells) bonds at a (premium the carrying value) ______ from the issue price to the par value over the bond’s term | decreases |
| A ______ is an entity created by law | Corporation |
| A ______ exists separately from the owners | Corporation |
| A ______ has rights and privileges | Corporation |
| A ______ can be privately held | Corporation |
| A_____ of a (corporation) is that it's a (separate legal entity) | Advantage |
| A_____ of a (corporation) is it's (transferable) ownership rights | Advantage |
| A_____ of a (corporation) is it's (continuous life) | Advantage |
| A_____ of a (corporation) is theres no (mutual agency) for stockholders | Advantage |
| A_____ of a (corporation) is there governmental (regulations) | Disadvantage |
| A_____ of a (corporation) is the corporate (taxation) | Disadvantage |
| A_____ of a (corporation) is being subject to the same property and (payroll taxes) as proprietorships | Disadvantage |
| A_____ of a (corporation) is the double (taxation) | Disadvantage |
| ____ have the (ability) to sell or otherwise (dispose of their stock) | Stockholders |
| ____ have the (ability) to (vote at stockholders’ meetings) | Stockholders |
| ____ have the (ability) to receive dividends) if declared | Stockholders |
| ____ have the (ability) to share in any assets remaining) after creditors are paid in a liquidation | Stockholders |
| ___ is the price at which a stock is bought and sold | Market value per share |
| A ______ occurs when a corporation sells its stock for more than par or stated value | Premium on stock |
| The ______ of a corporation is responsible for overseeing corporate activities | Board of Directors |
| The ______ is elected by stockholders | Board of Directors |
| The ______ is in charge of hiring and firing key executives who manage day-to-day operations | Board of Directors |
| ____ is the number of shares that a corporation’s charter allows it to sell | Authorized stock |
| ____ is the (amount) assigned per share by the corporation in its charter | Par value |
| Common stock is always at the _____ | Par value |
| The _____ is when all authorized shares of a corporation’s stock have the same rights and characteristics | Common stock |
| _____ is the (total amount) of cash and other assets that a corporation receives from its stockholders in exchange for its stock | Paid-in-capital |
| ______ is the cumulative (net income) (and loss) not distributed as dividends to stockholders | Retained earnings |
| The _____ is the (distribution of additional shares) to stockholders (according to their percent ownership) | Stock split |
| The ___ is done to keep the market price of stock affordable | Stock split |
| The ___ is done to show management’s confidence that the company is doing well | Stock split |
| The _____ is a (corporation's distribution of additional shares) of (its own stock) to its stockholders without any payment in return | Stock dividend |
| The ___ is done to keep the market price of stock affordable | Stock dividend |
| The ___ is done to show management’s confidence that the company is doing well | Stock dividend |
| _____ are (stocks that pay large cash) dividends on a regular basis | Income stocks |
| _____ are (stocks that pay little or no cash) dividends but are attractive to investors because of expected stock price increases | Growth stocks |
| The (date the directors vote to declare) and pay a dividend is the _____ | Date of declaration |
| (A liability for cash) dividends is (recorded) on the ______ | Date of declaration |
| The ______ is the (date for identifying the stockholders) to receive dividends | Date of record |
| The ______ has (special rights) that give it (priority over common stock): | Preferred Stock |
| The ______ has a (preference) for receiving dividends before any dividends are paid to common stockholders | Preferred Stock |
| The ______ has a (preference) in liquidation of assets | Preferred Stock |
| The ______ usually (does not have right to vote) | Preferred Stock |
| The ______ (stock shares) that are reacquired by the issuing corporation | Treasury stock |
| The _____ is (classified) as a contra equity account | Treasury stock |
| A company buys back its own stock to ______ | avoid a takeover of the company |
| A company buys back its own stock to ______ | have shares available to acquire another company |
| A company buys back its own stock to ______ | give it to employees as compensation |
| A company buys back its own stock to ______ | maintain a strong market for their stock |
| The _____ (does not have voting rights) | Treasury stock |
| Purchasing ______ (reduces the corporation’s assets and equity) by equal amounts | Treasury stock |
| You should ___ Treasury Stock, ___ Cash | Dr. , Cr. |
| With _____, (corporations do not record gains or losses) on transactions involving their own stock | Treasury stock |
| ______ are (corrections) of material (errors) made in past period financial statements | Prior period adjustments |
| ______ include (math errors), improper accounting, and missed facts | Prior period adjustments |
| _____ is reported in statement of retained earnings as (corrections) (net of income tax effects) to the beginning retained earnings balance | Prior period adjustments |
Created by:
22gonzalez
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