Ch 15 TorF

Created by kgoldner 

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False

Each bondholder may vote for the board of directors in proportion to the number of bonds held

True

Bond interest paid by a corporation in an expense, whereas dividends paid are not an expense of the corporation

False

Registered bonds are bonds that are delivered to owners by U.S registered mail service

True

A debenture bond is an unsecured bond which is issued against the general credit of the borrower

True

Bonds are a form of interest bearing notes payable

False

Neither corporate bond interest nor dividends are deductible for tax purposes

False

A 10% stock dividend is the equivalent of a $1,000 par value bond paying annual interest of 10%

False

The holder of a convertible bond can convert an interest payment received into a cash dividend on common stock if the dividend is greater than the interest payment

True

The board of directors may authorize more bonds than are issued

False

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued

True

Discount on bonds in an additional cost of borrowing and should be recorded as interest expense over the life of the bonds

False

If a corporation issued bonds at an amount less than face value, it indicates that the corporation has a weak credit rating

False

A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate

False

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date

True

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date

True

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount

True

Gains and losses are not recognized when convertible bonds are converted into common stock

False

Generally, convertible bonds do not pay interest

False

Each payment on a mortgage note payable consists of interest on the original balance of the loan and a reduction of the loan principal

True

A long term note that pledges title to specific property as security for a loan is known as a mortgage payable

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