Note disclosures for long-term debt generally include all of the following except

Note disclosures for long-term debt generally include all of the following except

a. assets pledged as security.
b. call provisions and conversion privileges.
c. restrictions imposed by the creditor.
d. names of specific creditors.


Answer: names of specific creditors

The times interest earned ratio is computed by dividing

The times interest earned ratio is computed by dividing

a. net income by interest expense.
b. income before taxes by interest expense.
c. income before income taxes and interest expense by interest expense.
d. net income and interest expense by interest expense.


Answer: income before income taxes and interest expense by interest expense

The debt to total assets ratio is computed by dividing

The debt to total assets ratio is computed by dividing

a. current liabilities by total assets.
b. long-term liabilities by total assets.
c. total liabilities by total assets.
d. total assets by total liabilities.


Answer: total liabilities by total assets

Long-term debt that matures within one year and is to be converted into stock should be reported

Long-term debt that matures within one year and is to be converted into stock should be reported

a. as a current liability.
b. in a special section between liabilities and stockholders' equity.
c. as noncurrent.
d. as noncurrent and accompanied with a note explaining the method to be used in its liquidation.


Answer: as noncurrent and accompanied with a note explaining the method to be used in its liquidation

Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?

Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?

a. The present value of future payments for sinking fund requirements and long-term debt maturities during each of the next five years.
b. The present value of scheduled interest payments on long-term debt during each of the next five years.
c. The amount of scheduled interest payments on long-term debt during each of the next five years.
d. The amount of future payments for sinking fund requirements and long-term debt maturities during each of the next five years.


Answer: The amount of future payments for sinking fund requirements and long-term debt maturities during each of the next five years

When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless

When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless

a. no interest rate is stated.
b. the stated interest rate is unreasonable.
c. the stated face amount of the note is materially different from the current cash sales price for similar items or from current market value of the note.
d. any of these.


Answer: any of these

Discount on Notes Payable is charged to interest expense

Discount on Notes Payable is charged to interest expense

a. equally over the life of the note.
b. only in the year the note is issued.
c. using the effective-interest method.
d. only in the year the note matures.


Answer: using the effective-interest method