Bonds, with the umc face value, issued at a premium will A I lave a greater matu
ID: 2461287 • Letter: B
Question
Bonds, with the umc face value, issued at a premium will A I lave a greater maturity value than a bond issued at a discount B I have a lesser maturity value than a bond issued at a discount C Have I he same maturity value as a bond issued at a discount D Have a different maturity value than a bond issued at a discount, depending upon the interest rate am maturity dale 9 The amounts that a business withholds as taxes from an employee s earnings A Represent payroll taxes expense to the employer H Arc deposited in an interest-bearing account until the employee is terminated C Represent miscellaneous revenue to the employer D Represent currctu liabilities to the employer 10 When a corporation has a right to redeem bonds in advance of the maturity date, the bond is considered a A Convertible bond B Callable bond C Junk bond D Debenture bond II [fa bond is issued at par and bcterauntcrest dates A I he cash received by the corporation will be less than the face value of the bond B The cash received by the corporatio will be greater than the face value of the bond C The cash received by the corporation will be the same as the face value of the bond D Interest receivable will be debited 12 One advantage of issuing bonds instead of stock is that A Interest is tax deductible, whereas dividends are not B Bonds have a longer maturity date C Interest rates are lower than dividend rates D The issuance of bonds does not affect earnings per share 13 Choose the statement that correctly summarizes the tax advantage of laising moocy by issuing bonds instead of common stock: A The amount paid by the corporation to redeem bonds at maturity date is deductible in computing income subject to corporate income tax B Interest payments are deductible in determining income subject to corporate income tax. dividends arc not deductible C A corporation must pay tax on the sales price of stock issued, but is not taxed on the amount received when bonds arc issued D Both interest and dividends paid are deductible in computing taxable income, but since interest must x paid annually, the corporation usually gets a larger tax deduction over the life of the bonds payable 14 An operating lease: A creates an asset and a liability on the balance sheet. B Is a form of off-balance sheet JlnaQCin* C Is always preferable to a capital lease D Transfers title to the asset being leasedExplanation / Answer
Answer for question no.8:
Answer is option C. Has the same maturity value as the bond issued at discount.
Matuirty value of the bond is the nothing but the face value of the bond. This is the value stated on the bond.
Answer for question no.9:
Answer is option D. It represents the current liability to the employer as these amounts needs to be deposited with the government, untill the amount is deposited, it is presented under current liabilities section of the business.
Answer for question no,10.:
Answer is option B. Bonds that can be redeemed before maturity are called callable bonds.
Answer for question no.11:
Answer is option B.The amount received also includes the amount of interest till the date of issue. So, the amount received would be more than the face value of the bond.
Answer for question no.12:
Answer is option A. Interest can be deducted before tax is calculated, but dividends is paid from profits after tax is paid.
Answer for question no.13:
Answer is option B. Interest can be deducted before tax is calculated, but dividends is paid from profits after tax is paid.
Answer for question no.14:
Answer is option B. It is an off- balance sheet financing item, as the details of the operating lease are disclosed in the notes to accounts.