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true false questions 1 a liability that is known to exist but the precise dollar amo 4298573

True / False Questions
 

1. A liability that is known to exist but the precise dollar amount is not known is called a possible liability. 
 

 

2. Bonds secured by a pledge of specific assets are called debenture bonds. 
 

 

3. Junk bonds are attractive to investors because they carry a high rate of interest and are usually convertible into a specified number of shares of capital stock. 
 

 

4. Dividends paid by a corporation to its stockholders are tax deductible by the corporation but interest paid on bonds is not. 
 

 

5. When bonds are sold by one investor to another, they sell at market price plus accrued interest since the last payment date. 
 

 

6. When bonds are issued at a discount, the borrower must pay more at maturity than the amount originally received. 
 

 

7. The account Discount on Bonds Payable actually represents interest expense and will be amortized over the life of the bond. 
 

 

8. A loss contingency is recorded in the accounting records when it is probable that a loss has been incurred and the amount of the loss is known. 
 

 

9. A commitment, such as a contract to pay a baseball player $5,000,000 a year for five years, should be listed as a long-term liability. 
 

 

10. If a lease transfers ownership of the property to the lessee at the end of the lease term, it should be regarded as an operating lease. 
 

 

 

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