Questions from General Accounting


Q: What is the advantage of issuing bonds instead of obtaining financing from

What is the advantage of issuing bonds instead of obtaining financing from the company’s owners?

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Q: What is a bond indenture? What provisions are usually included in

What is a bond indenture? What provisions are usually included in it?

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Q: Why might a business prefer a note receivable to an account receivable

Why might a business prefer a note receivable to an account receivable?

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Q: What are the contract rate and the market rate for bonds?

What are the contract rate and the market rate for bonds?

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Q: Does the straight-line or effective interest method produce an interest

Does the straight-line or effective interest method produce an interest expense allocation that yields a constant rate of interest over a bond’s life? Explain.

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Q: Why does a company that issues bonds between interest dates collect accrued

Why does a company that issues bonds between interest dates collect accrued interest from the bonds’ purchasers?

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Q: Assume a U.S. company makes a credit sale to

Assume a U.S. company makes a credit sale to a foreign customer that is required to make payment in its foreign currency. In the current period, the exchange rate is $1.40 on the date of the sale and...

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Q: Identify the three classes of non-influential and two classes of

Identify the three classes of non-influential and two classes of influential investments in securities.

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Q: Under what conditions should investments be classified as current assets? As

Under what conditions should investments be classified as current assets? As long-term assets?

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Q: For investments in available-for-sale securities, how are

For investments in available-for-sale securities, how are unrealized (holding) gains and losses reported?

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