Question Details

The debt to total assets ratio is computed by dividing 


1.		The market value (present value) of a bond is a function of all of the following except the
a.	dollar amounts to be received.
b.	length of time until the amounts are received.
c.	market rate of interest.
d.	length of time until the bond is sold.


	2.	The market rate of interest for a bond issue which sells for more than its face value is
a.	independent of the interest rate stated on the bond.
b.	higher than the interest rate stated on the bond.
c.	equal to the interest rate stated on the bond.
d.	less than the interest rate stated on the bond.


	3.	When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the
a.	carrying value of the bonds.
b.	face value of the bonds.
c.	original selling price of the bonds.
d.	maturity value of the bonds.

	4.	Hoffman Corporation retires its bonds at 106 on January 1, following the payment of semi-annual interest. The face value of the bonds is $600,000. The carrying value of the bonds at the redemption date is $629,700. The entry to record the redemption will include a
a.	credit of $29,700 to Loss on Bond Redemption.
b.	debit of $636,000 to Bonds Payable.
c.	credit of $6,300 to Gain on Bond Redemption.
d.	debit of $629,700 to Bonds Payable.

	
	5.	Each payment on a mortgage note payable consists of
a.	interest on the original balance of the loan.
b.	reduction of loan principal only.
c.	interest on the original balance of the loan and reduction of loan principal.
d.	interest on the unpaid balance of the loan and reduction of loan principal.

6.		Buffon Electronics Company issues a $1,000,000, 10%, 20-year mortgage note on January 1. The terms provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $58,276. After the first installment payment, the principal balance is
a.	$1,000,000.
b.	$983,034.
c.	$991,724.
d.	$779,125.

	7.	The debt to total assets ratio is computed by dividing 
a.	long-term liabilities by total assets.
b.	total debt by total assets.
c.	total assets by total debt.
d.	total assets by long-term liabilities.


a 8.	The market price of a bond is the
a.	present value of its principal amount at maturity plus the present value of all future interest payments.
b.	principal amount plus the present value of all future interest payments.
c.	principal amount plus all future interest payments.
d.	present value of its principal amount only.


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