# What is the effect of amortizing a bond discount?

The time period for classifying a liability as current is one year or the operating cycle, whichever is

 shorter.
 probable.
 possible.
 longer.

2) Which one of the following is not a typical current liability?

 Salaries payable
 Current maturities of long-term debt
 Mortgages payable
 Interest payable

3) Buttner Company borrows \$88,500 on September 1, 2017, from Harrington State Bank by signing an \$88,500, 12%, one-year note. How much is accrued interest at December 31, 2017?

 \$4,425
 \$3,540
 \$10,620
 \$2,655

4) How is the market value of a bond issuance determined?

 By adding the present value of the principal amount to the present value of the interest payments.
 By computing the present value of the interest payments.
 By computing the present value of the principal.
 By adding the face value of the principal amount to the stated value of the interest payments.

5) If the contractual rate of interest is lower than the market rate of interest, bonds will sell at a premium.

 True
 False

6) What is the effect of amortizing a bond discount?

 It decreases the maturity value of the bonds.
 It increases the carrying value of the bonds.
 There is no effect on the bond interest expense.
 It decreases bond interest expense.

7) Cuso Inc. issues 10-year bonds with a maturity value of \$200,000. If the bonds are issued at a premium, what does this indicate?

 The market interest rate exceeds the contractual interest rate.
 The contractual interest rate exceeds the market interest rate.
 The contractual interest rate and the market interest rate are the same.
 No relationship exists between the market and contractual rates.

8) When a bond is sold at a premium, at what amount is it reported on the balance sheet?

 Interest value
 Market value
 Carrying value

9) Tanner, Inc. issued a 10%, 5-year, \$100,000 bond when the market rate of interest was 12%. At what value will the bond sell?

 Face value
 Par