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Question(s) / Instruction(s):

An indirect benefit of total quality management and just-in-time manufacturing is the improvement in the quality of management and the products and services offered.

a)            True

b)            False


32.          The salary paid to the supervisor of an assembly line would normally be classified as:

a)            Direct labor.

b)            Indirect labor.

c)            A period cost.

d)            A general cost.

e)            An assembly cost.


33.          Costs classified by controllability are useful for:

a)            The balance sheet.

b)            The income statement.

c)            Management reports.

d)            Evaluation reports.

e)            Both C and D.


34.          Long-term bonds have relatively higher interest rates because they carry higher risk due to the longer time period.

a)            True

b)            False


35.          A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:

a)            $3,500.00

b)            $7,000.00

c)            $3,286.95.

d)            $6,573.90

e)            $1,750.00


36.          When a bond sells at a premium:

a)            The contract rate is above the market rate.

b)            The contract rate is equal to the market rate.

c)            The contract rate is below the market rate.

d)            It means that the bond is a zero coupon bond.

e)            The bond pays no interest.


37.          A company issues at par 9% bonds with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. How much total cash interest is received on April 1 by the bond issuer?

a)            $ 750.

b)            $5,250.

c)            $1,500.

d)            $3,000.

e)            $6,000.



38.          If an issuer sells bonds at a date other than an interest payment date:

a)            This means the bond sells at a premium.

b)            This means the bond sells at a discount.

c)            The issuing company will report a loss on the sale of the bond.

d)            The issuing company will report a gain on the sale of the bond.

e)            The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.


39.          A discount on bonds payable:

a)            Occurs when a company issues bonds with a contract rate less than the market rate.

b)            Occurs when a company issues bonds with a contract rate more than the market rate.

c)            Increases the Bond Payable account.

d)            Decreases the total bond interest expense.

e)            Is not allowed in many states to protect creditors.


40.          Sinking fund bonds:

a)            Require the issuer to set aside assets to retire the bonds at maturity.

b)            Require equal payments of both principal and interest over the life of the bond issue.

c)            Decline in value over time.

d)            Are registered bonds.

e)            Are bearer bonds.


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