Chapter 10
Autor: mona • June 28, 2012 • Essay • 364 Words (2 Pages) • 1,263 Views
Chapter 10
Liabilities
True/False
1. A liability that is known to exist but the precise dollar amount is not known is called a possible liability
Answer: False
Learning Objective: 1
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
2. Bonds secured by a pledge of specific assets are called debenture bonds.
Answer: False
Learning Objective: 5
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
3. Junk bonds are attractive to investors because they carry a high rate of interest and are usually convertible into a specified number of shares of capital stock.
Answer: False
Learning Objective: 5
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
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4. Dividends paid by a corporation to its stockholders are tax deductible by the corporation but interest paid on bonds is not.
Answer: False
Learning Objective: 5
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
5. When bonds are sold by one investor to another, they sell at market price plus accrued interest since the last payment date.
Answer: True
Learning Objective: 5, 6
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measuremen
6. When bonds are issued at a discount, the borrower must pay more at maturity than the amount originally
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