MUHASEBE II

Short-term (current) liabilities consist of an expected outflow of resources arising from present obligations that are payable within a year or the operating cycle of the company whichever is longer. The correct answer is A.

The bond indenture is a contract or loan agreement under which the bonds are issued. The correct answer is B.

Bonds issued in the name of the owner are called registered bonds, bonds not issued in the name of the owner are called bearer (coupon) bonds. Bonds which pay interest from the profit of issuing company are called “income bonds”, bonds which pay interest from specified revenue sources are called “revenue bonds”. Bond issues that mature on a single date are called term bonds, bond issues that mature in installments are called serial bonds. The correct answer is C.

Bonds issued in the name of the owner are called registered bonds, bonds not issued in the name of the owner are called bearer (coupon) bonds. Bonds which pay interest from the profit of issuing company are called “income bonds”, bonds which pay interest from specified revenue sources are called “revenue bonds”. Bond issues that mature on a single date are called term bonds, bond issues that mature in installments are called serial bonds. The correct answer is D.

Present Value of the Principal
200,000 TL x 0.62092 (Appendix A, Table 1, n: 5, i: 10%) 124,184 TL
Present Value of the Interest Payments
24,000 x 3.79079 (Appendix A, Table 2, n: 5, i: 10% ) 90,979 TL
Present value (selling price) of the bonds 215,163 TL

Debit:

Cash - 215,163

Credit:

Long Term Bonds Payable - 200,000

Premium on LT Bonds Payable - 15,163

The correct answer is A.

Present Value of the Principal
150,000 TL x 0.56743 (Appendix A, Table 1, n: 5, i: 12%) 85,114 TL
Present Value of the Interest Payments
18,000 TL x 3.60478 (Appendix A, Table 2, n: 5, i: 12% ) 64,886 TL
Present value (selling price) of the bonds 150,000 TL

The correct answer is D.

Present Value of the Principal
100,000 TL x 0.74726 (Appendix A, Table 1, n: 10, i:3%) 74,409 TL
Present Value of the Interest Payments
4,000 TL x 8.53020 (Appendix A, Table 2, n: 10, i: 3%) 34,121 TL
Present value (selling price) of the bonds 108,530 TL

The correct answer is B.

Present Value of the Principal
100,000 TL x 0.61391 (Appendix A, Table 1, n: 10, i: 5%) 61,391 TL
Present Value of the Interest Payments
4,000 TL x 7.72173 (Appendix A, Table 2, n: 10, i: 5%) 30,887 TL
Present value (selling price) of the bonds 92,278 TL

The correct answer is C.

Present Value of the Principal
10,000 TL x 0.71178 (Appendix A, Table 1, n: 3, i: 12%) 7,118 TL
Present Value of the Interest Payments
1,000 TL x 2.40183 (Appendix A, Table 2, n: 3, i: 12%) 2,402 TL
Present value (selling price) of the bonds 9,520 TL

First year interest expense is 9,520 TL x 12% = 1,142 TL

The correct answer is E.

Bonds not backed by collateral are called “unsecured bonds” (also called debenture bonds). The correct answer is E.

With respect to the way they mature, bonds are classified as term bonds, serial bonds and callable bonds. Bond issues that mature on a single date are called “term bonds”. Bond issues that mature in installments are called “serial bonds”. Bond issues that give the issuer the right to call and retire the bonds prior to maturity is called “callable bonds.The correct answer is B.

Bonds issued in the name of the owner are called “registered bonds” and require surrender of the certificate and issuance of a new certificate to complete a sale. Bonds not recorded in the name of the owner are called “bearer (coupon) bonds” and they can be transferred from one owner to another by mere delivery. The correct answer is A.

When selling price of a bond is equal to its face value that means it is sold at face value (at par). When selling price of a bond is different from its face value that means it is sold either at premium or discount. The correct answer is C.

Bonds issued at face value (at par value) means stated interest rate is equal to market interest rate and no premium and discount exists. The correct answer is A.

Amortization of a discount increases bond interest expense, amortization of a premium decreases bond interest expense. The correct answer is B.

The carrying value is the face amount minus any unamortized discount or plus any unamortized premium.The term carrying value is synonymous with book value. The correct answer is C.

A long-term note is a promissory note that represents a loan from a bank or other creditor. Long-term notes payable is similar to short-term notes payable except that the term of the notes exceeds one year. The basic difference between short term notes payable and long-term notes payable is the maturity date. As we have already mentioned before long term liabilities consist of an expected outflow of resources arising from present obligations that are not payable within a year or the operating cycle of the company whichever is longer. Long-term notes payable is typically reported in the long-term liabilities section of the balance sheet. The correct answer is B.

Adjustment process to the cost as bond interest expense over the life of bonds called amortization. The method used for amortization of a discount or premium is called effective interest method. The correct answer is E.

In order to finance and expand their operations companies need funds. Although some of the necessary funding can be provided by their own operations, companies usually have to raise some of the funds from external sources. Therefore, these companies are required to obtain longterm financing from banks and other financial institutions and we call this process as “external financing”. The correct answer is E.

In a balance sheet, obligations related with external financing sources named as “liabilities”. Liabilities are first classified as “Current (ShortTerm) Liabilities” and “Non-Current (LongTerm) Liabilities” based on the time period in which expected debt will be paid back. Short term liabilities consist of an expected outflow of resources arising from present obligations that are payable within a year or the operating cycle of the company whichever is longer. Whereas long term liabilities consist of an expected outflow of resources arising from present obligations that are not payable within a year or the operating cycle of the company whichever is longer. The correct answer is D.