GB518 Unit 5 Quiz A Graded

GB518 Unit 5 Quiz A Graded

1. Question : A company issues at par 7% bonds with a par value of $500,000 on June 1, which is 5 months after the most recent interest date. How much total cash interest is received on May 1 by the bond issuer?$0$2,916.66$100,000.00$14,583.33$35,000.00Question 2. Question : A corporations distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:Stock dividendStock subscriptionPremium on stockDiscount on stockTreasury stockQuestion 3. Question : The contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties is called a(n):DebentureBond indentureMortgageInstallment noteMortgage contractQuestion 4. Question : A dividend preference for preferred stock means that:Preferred stockholders receive their dividends before common shareholdersPreferred shareholders are guaranteed dividendsDividends are paid quarterlyPreferred stockholders prefer dividends more than common stockholdersDividends must be declared on preferred stockQuestion 5. Question : Stock that was reacquired by the company and is still held by the issuing corporation is called:Capital stockTreasury stockRedeemed stockPreferred stockQuestion 6. Question : A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a:Credit to Interest IncomeCredit to Premium on Bonds PayableCredit to Discount on Bonds PayableDebit to Premium on Bonds PayableQuestion 7. Question : A premium on common stock:Is the amount paid in excess of par by purchasers of newly issued stockIs the difference between par value and issue price when the amount paid is below parRepresents profit from issuing stockRepresents capital gain on sale of stockIs prohibited in most statesQuestion 8. Question : A bond traded at 102 ® means that:The bond pays 2.5% interestThe bond traded at $1,025 per $1,000 bondThe market rate of interest is 2.5%The bonds were retired at $1,025 eachThe market rate of interest is 2 ®% above the contract rateQuestion 9. Question : Sinking fund bonds:Require the issuer to set aside assets in order retire the bonds at maturityRequire equal payments of both principal and interest over the life of the bond issueDecline in value over timeAre registered bondsAre bearer bondsQuestion 10. Question : To provide security to creditors and to reduce interest costs, bonds and notes payable can be secured by:Safe deposit boxesMortgagesEquityThe FASBDebenturesQuestion 11. Question : Bonds owned by investors whose names and addresses are recorded by the issuing company and for which interest payments are made with checks to the bondholders, are called:Callable bondsSerial bondsRegistered bondsCoupon bondsQuestion 12. Question : Promissory notes that require the issuer to make a series of payments consisting of both interest and principal are:DebenturesDiscounted notesInstallment notesIndenturesInvestment notesQuestion 13. Question : Secured bonds:Are also referred to as debenturesHave specific assets of the issuing company pledged as collateralAre backed by the issuers bankAre subordinated to those of other unsecured liabilitiesAre the same as sinking fund bondsQuestion 14. Question : What is the debt to equity ratio for a company who has $700,000 in total liabilities and $3,500,000 in total equity?20%5$2,100,0002%.5Question 15. Question : The total amount of stock that a corporations charter allows it to issue is referred to as:Issued stockOutstanding stockCommon stockPreferred stockAuthorized StockQuestion 16. Question : Shamrock Company had net income of $30,000. On January 1, there were 8,000 shares of common stock outstanding. On April 1, the company issued an additional 2,000 shares of common stock. There were no other stock transactions. The company has an earnings per share of:$3.75$3.00$3.33$15.00$3.16Question 17. Question : Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is called:Noncumulative preferred stockParticipating preferred stockCallable preferred stockCumulative preferred stockConvertible preferred stockQuestion 18. Question : A company must repay the bank $10,000 cash in 3 years for a loan. The loan agreement specifies 8% interest compounded annually. The present value factor for 3 years at 8% is 0.7938. The present value of the loan is:$10,000$12,400$7,938$9,200$7,600Question 19. Question : Owners of preferred stock often do not have:Ownership rights to assets of the corporationVoting rightsPreference to dividendsThe right to sell their stock on the open marketPreference to assets at liquidationQuestion 20. Question : Bonds with a par value of less than $1,000 are known as:Junk bondsBaby bondsCallable bondsUnsecured bondsConvertible bondsQuestion 21. Question : If an issuer sells a bond at any other date than the interest payment date:This means the bond sells at a premiumThis means the bond sells at a discountThe issuing company will report a loss on the sale of the bondThe issuing company will report a gain on the sale of the bondThe buyer normally pays the issuer the purchase price plus any interest accrued since the prior interest payment dateQuestion 22. Question : A company borrowed $50,000 cash from the bank and signed a 6-year note at 7%. The present value factor for an annuity for 6 years at 7% is 4.7665. The annual annuity payments equal $10,490. The present value of the loan is:$10,490$11,004$50,000$52,450$238,325Question 23. Question : A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:A debit to Organization Expenses for $3,000A debit to Organization Expenses for $5,000A credit to Common Stock for $5,000A credit to Contributed Capital in Excess of Par Value, Common Stock for $5,000A debit to Contributed Capital in Excess of Par Value, Common Stock for $2,000Question 24. Question : A companys board of directors votes to declare a cash dividend of $0.75 per share. The company has 15,000 shares authorized, 10,000 issued and 9,500 shares outstanding. The total amount of the cash dividend is:$375$4,125$7,125$7,500$11,250Question 25. Question : Which of the following statements is true?Interest on bonds is tax deductibleInterest on bonds is not tax deductibleDividends to stockholders are tax deductibleBonds do not have to be repaidBonds always decrease return on equity


Comments are closed.