True or False-In horizontal analysis, the base year is the most recent year. Tru

Question

True or False-In horizontal analysis, the base year is the most recent year.

True or False- Interest on bonds must be paid in full even when the corporation operates at a loss.

True or False- The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock.

True or False- Amortizing bond premiums over the period from the issue date to the maturity date reduces bond interest expense shown on the income statement.

True or False- The Bonds Payable account would be credited for $104,000 to record the issuance of $100,000 par value, 10 percent bonds at a market price of 104

True or False- A legal partnership does not exist unless there is a written partnership agreement.

True or False- Land purchased for a future building site or as an investment would not be shown in the Property, Plant, and Equipment section of the balance sheet.

True or False- Investors will pay an amount greater than the face amount of a bond if the face interest rate on bonds is greater than the market interest rate.

True or False-When common stock is issued, the par value, or stated value, of the shares issued is recorded in the Common Stock account.

True or False-Quick assets include cash, receivables, and inventories.

Explanation / Answer

1. False- In horizontal analysis, base year is the Earliest of all years taken into consideration. Generally, it will be

               an year or a period preceeding one-two years to the current year.

2. True- Interest on bonds payable is a fixed obligation to the corporation. There is no execuse to the corporation,

             if it operates at profit or not.

3. False- The Amount received in excess of par value of prefernce shares issued is recorded in account called

               securities premium Account

4. False- Amortizing bond premium amount, no way reduces the fixed obligation to pay interest which reflects as

             interest expense in Income statement.

5. False - The Bond payable account would be credited for $100,000 only and the remaining $4,000 would be

                credited to securities premium Account.

6. True - A legal partnership exist without a partnership agreement. In such a case, partnership is governed by

               default rules that are put in place by your state of business.

7. False - Land would be shown in the property, Plant and equipment section of a balance sheet, even if purchased

               for a future building site.

8. True - When face interest rate on bonds is greater than market interest rate, Generally Invetsors willing to pay

               an amount greater than face amount of a bond. Simple reason is,opportunity cost of investment is higher

               So, Investors pay more amount, for higher interest.

9. True - When common stock is issued, the par value or stated value of shares issued is reorded under common

               stcok account.

10. False- Quick assets includes cash, receivables and short term investments but not inventory.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.