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Multiple choice

1.Which of the following is not an advantage of bonds.

a. Bonds do not affect owner control
b. None of the other answers
c. Bonds can increase return on equity
d. Bonds require payment of both periodic interest and the par value at maturity

2.Hildebrand Morgan makes trendy clothing and accessories for sophisticated women's boutiques on the upper east side of Manhattan. They are leasing their current location as well as their delivery vehicle and would like to sell bonds. Without the necessary collateral to back the issuance Hildebrand must issue the debt based on their overall credit worthiness. The types of bonds Hildebrand will issue will be

a. Secured bonds
b. Debentures
c. Junk Bonds
d. Sinking Fund Bonds
e. None of the other answers

3.Securities not classified as trading or held-to-maturity securities but purchased with the intent to sell them in the future are known as...

a. None of the other answers
b. Equity securities with significant influence
c. Available for sale securities
d. Equity securities with controlling influence

4.Martigan Smith Pet Supplies in Liverpool, England orders vanity collars for attractive pooches around town. They ordered zippy-dippy collars from LeBluff Canine Clothiers located in Baltimore, Maryland. LeBluff's catalog is printed in British pounds for their English clientel.

LeBluff sold the four hundred collars at one pound (British Pound) per collar while the exchange rate was $1.75 per pound

Two weeks later during preparation of the quarterly financial statements their accounting clerk noted that the exchange rate increased to $1.90. What would be the result of these activities on the financial statements?

a. No affect on the financial statements...
b. The Balance Sheet would show an increase to Foreign Exchange Liability
c. The Income Statement would show an increase arising from a Foreign Exchange Gain
d. None of the other answers

5.True or False? Corporations with international subsidiaries must report their subsidiary financial data in the currency in which the subsidiary is physically located.

a. True
b. False

6.Held to maturity debt securities are typically...

a. Long term stock purchases in high profile corporations
b. Long term stock purchases in smaller companies
c. Bonds
d. None of the other answers

Solution Preview

1. d. Bonds require payment of both periodic interest and the par value at maturity - that is why this is not an ...

Solution Summary

The solution explains some multiple choice questions relating to accounting