Q: Which formula is used to calculate the carrying value of a bond issued at a discount?

$$\text{Carrying Value} = \text{Face Value} - \text{Unamortized Discount}$$

Question 1

Which equation best represents the fundamental accounting equation used to prepare the balance sheet?

Accepted Answer

$$A = L + E$$

Question 2

A company issues $$1,000$$ bonds at par and incurs $$5 in $$transaction costs. What is the initial cash inflow recorded?

Accepted Answer

$$995$$

Question 3

Which of the following is NOT a required financial statement for external reporting?

Accepted Answer

Statement of Internal Controls

Question 4

If a company uses the FIFO method for inventory, which items are assumed to be sold first?

Accepted Answer

Oldest items purchased

Question 5

A company estimates the net realizable value of inventory at $$1,080$$ and the book value is $$1,100. $$What is the impairment loss?

Accepted Answer

$$20$$

Question 6

Which formula is used to calculate the carrying value of a bond issued at a discount?

Accepted Answer

$$	ext{Carrying Value} = 	ext{Face Value} - 	ext{Unamortized Discount}$$

Question 7

When using the indirect method for the statement of cash flows, which adjustment is made to net income for depreciation expense?

Accepted Answer

Add depreciation expense

Question 8

A company recognizes revenue when it is earned and realizable. Which principle does this illustrate?

Accepted Answer

Revenue Recognition Principle

Question 9

If a company pays for inventory before receiving it, what is the immediate impact on the balance sheet?

Accepted Answer

Decrease in cash and increase in other assets (prepaid)

Question 10

Which of the following best describes the treatment of operating lease expenses under the straight-line method?

Accepted Answer

Expense is spread evenly over the lease term

Question 11

A company has $$6.1 in $$beginning allowance for bad debts, $$4.4 in $$expense, and $$7.2 in $$ending allowance. What is the amount utilized?

Accepted Answer

$$3.3$$

Question 12

Which ratio is most affected when a company repurchases its own stock?

Accepted Answer

Debt-to-Equity Ratio

Question 13

If a company issues stock compensation with a grant date fair value of $$10$$ per unit and $$100$$ units vest over two years, what is the annual expense?

Accepted Answer

$$1,000$$

Question 14

Which of the following is true about the LIFO reserve?

Accepted Answer

It is added to reported inventory to convert to FIFO

Question 15

A company purchases a machine for $$1,000$$, expects to use it for three years, and sell it for $$100. $$What is the annual straight-line depreciation expense?

Accepted Answer

$$300$$

Question 16

Which of the following transactions would increase both assets and equity?

Accepted Answer

Issuing common stock for cash

Question 17

When a company recognizes an expense before paying cash, what is the impact on the accounting equation?

Accepted Answer

Increase in liabilities and decrease in equity

Question 18

Which of the following is a real-world example of a timing difference between income and cash impact?

Accepted Answer

Recognizing revenue when goods are shipped but payment is received later

Question 19

A company issues a $$3-$$year bond with $$5,000$$ face value and $$5	ext{%}$$ annual coupon payments. What is the total coupon payment over the bond's life?

Accepted Answer

$$750$$

Question 20

Which of the following best describes the matching principle?

Accepted Answer

Expenses are recognized in the same period as the related revenues

Final Exam Review: Introductory Financial Accounting (MGMT 200)

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