Question

T/F Questions:

1. Callable bonds can be converted to stock.

2. An entertainment company received $6 million in cash for advance season ticket sales. Prior to the beginning of the season, these sales should be recorded as a liability.

3. The effective-interest method of amortization is considered a conceptually superior method of accounting for bonds.

4. If the stated interest rate exceeds the market interest rate, a bond will sell at a premium.

5. The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

6. If the likelihood of a loss is reasonably possible, a contingent liability is recorded by making an appropriate journal entry.

7. Bonds that are not backed by collateral are referred to as "debentures."

8. The principal of a loan does not include any interest charges.

Answer 1

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1. Ans; fake callable bonds are not Convectable bonds can be callable but 2. conwertable Ans True When a company receives to customers, is a leability cash before at provide and sence or goods and at & called as unearned revenue. 30 Ans: True Becauset It correctly caluclates Interest expense by multiply on the true cost of broaving amount that is actually owed to con nuestors. 4. Anst Because Preston True when higher interest for a higher yield rate is offered to attract and will pay for it.