13. Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is called: (Points : 2)
Noncumulative preferred stock
Participating preferred stock
Callable preferred stock
Cumulative preferred stock
Convertible preferred stock
14. Bonds owned by investors whose names and addresses are recorded by the issuing company and for which interest payments are made with checks to the bondholders, are called: (Points : 2)
Callable bonds
Serial bonds
Registered bonds
Coupon bonds
15. A bond traded at 102 ½ means that: (Points : 2)
The bond pays 2.5% interest
The bond traded at $1,025 per $1,000 bond
The market rate of interest is 2.5%
The bonds were retired at $1,025 each
The market rate of interest is 2 ½% above the contract rate
16. A corporation’s distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a: (Points : 2)
Stock dividend
Stock subscription
Premium on stock
Discount on stock
Treasury stock
17. Installment notes payable that require periodic payments of accrued interest plus equal amounts of principal result in: (Points : 2)
Periodic total payments that gradually decrease in amount
Periodic total payments that are equal
Periodic total payments that gradually increase in amount
Increasing amounts of interest each period
Increasing amounts of principal each period
18. A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. (Points : 2)
$0
$33,750
$67,500
$750,000
$1,550,000
19. Bonds that give the issuer an option of retiring them prior to the date of maturity are: (Points : 2)
Debentures
Serial bonds
Sinking fund bonds
Registered bonds
Callable bonds
20. A company issues at par 7% bonds with a par value of $500,000 on June 1, which is 5 months after the most recent interest date. How much total cash interest is received on May 1 by the bond issuer? (Points : 2)
$0
$2,916.66
$100,000.00
$14,583.33
$35,000.00
21. Amortizing a bond discount: (Points : 2)
Allocates a part of the total discount to each interest period
Increases the market value of the Bonds Payable
Decreases the Bonds Payable account
Decreases interest expense each period
Increases cash flows from the bond
22. Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as: (Points : 2)
Convertible bonds
Sinking fund bonds
Callable bonds
Serial bonds
Junk bonds
23. Operating leases differ from capital leases in that (Points : 2)
For a capital lease the lessee records the lease payments as rent expense, but for an operating lease the lessee reports the lease payments as depreciation expense
For an operating lease the lessee depreciates the asset acquired under lease, but for the capital lease the lessee does not
Operating leases create a long-term liability on the balance sheet, but capital leases do not
Operating leases do not transfer ownership of the asset under the lease, but capital leases often do
Operating lease payments are generally greater than capital lease payments
24. What is the debt to equity ratio for a company who has $700,000 in total liabilities and $3,500,000 in total equity? (Points : 2)
20%
5
$2,100,000
2%
.5
25. A company had net income of $250,000. On January 1, there were 12,000 shares of common stock outstanding. On May 1, the company issued an additional 9,000 shares of common stock. The company declared a $7,900 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company had an earnings per share of: (Points : 2)
$13.45
$13.89
$11.53
$26.90
Amount cannot be determined as problem does not state if there are any dividends in arrears
