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20 terms

Ch 15 TorF

STUDY
PLAY
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