Ch 15 TorF

20 terms by kgoldner

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


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


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


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


Bonds are a form of interest bearing notes payable


Neither corporate bond interest nor dividends are deductible for tax purposes


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


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


The board of directors may authorize more bonds than are issued


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


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


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


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


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


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


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


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


Generally, convertible bonds do not pay interest


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


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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