FAR — Financial Accounting & Reporting — Quiz 59

Questions in this quiz (10)

1. Which type of bond gives the issuer the right to repay the bond before maturity?

   • Convertible bonds
   • Callable bonds
   • Secured bonds
   • Debenture bonds

2. Which type of bond is supported by company assets pledged as collateral?

   • Convertible bonds
   • Secured bonds
   • Callable bonds
   • Debenture bonds

3. Which type of bond relies solely on the issuer's creditworthiness?

   • Mortgage bonds
   • Secured bonds
   • Debenture bonds
   • Callable bonds

4. What term refers to the interest rate investors require for a bond?

   • Coupon rate
   • Market rate
   • Stated rate
   • Effective rate

5. Bonds are issued at a premium or discount depending on:

   • Inventory levels
   • Market interest rate compared to stated rate
   • Company profit margin
   • Cash flow levels

6. Bonds sell at a discount when the market interest rate is:

   • Lower than stated rate
   • Equal to stated rate
   • Higher than stated rate
   • Zero

7. Bonds sell at a premium when the market interest rate is:

   • Lower than the stated rate
   • Higher than the stated rate
   • Equal to the stated rate
   • Variable

8. Where are bonds payable reported as liabilities?

   • Income statement
   • Balance sheet
   • Statement of cash flows
   • Statement of retained earnings

9. What happens when a bond reaches maturity?

   • Interest rate increases
   • Principal is repaid
   • Bond converts to stock
   • Bond becomes long-term asset

10. Which account decreases when bonds are paid off at maturity?

    • Interest expense
    • Bonds payable
    • Revenue
    • Accounts receivable