Reading 38: Long-Term Liabilities and Leases - LOS a ～ Q6- discount, black, style, white, subsequent

mayanfang1

Q6. A long-term bond is sold at a discount. In subsequent years cash flow from operations will be:

A)   properly stated.

B)   understated.

C)   overstated.

Q7. Which of the following statements regarding the issuance of bonds is most accurate? Compared to bonds issued at par, bonds issued at a:

A)   premium will have overstated cash flows from operations (CFO).

B)   discount will have overstated cash flows from financing (CFF).

C)   discount will have overstated cash flows from operations (CFO).

Q8. A company issued an annual-pay bond with the following characteristics:

Face value	$67,831
Maturity	4 years
Coupon	7%
Market interest rates	8%

What is the present value of the interest payments on the date when the bonds are issued?

A)   $15,726.

B)   $49,857.

C)   $65,582.

Q9. What is the unamortized discount on the date when the bonds are issued?

A)   $15,729.

B)   $1,748.

C)   $2,249.

Q10. What is the unamortized discount at the end of the first year?

A)   $1,750.

B)   $538.

C)   $1,209.

Q11. Which of the following statements regarding the issuance of a discount bond is most accurate?

A)   The cash from investing (CFI) is increased by the amount of the proceeds.

B)   The cash from financing (CFF) is increased by the amount of the proceeds.

C)   The cash from operations (CFO) is understated.

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