Summary ACC 308 WEEK 6 CHAPTER 14 LONG-TERM LIABILITIES & BONDS STUDY GUIDE FOR

ACC 308 ACC 308 Week 6 Chapter 14


STUDY
GUIDE

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resources

ACC 308 WEEK 6 CHAPTER 14 LONG-TERM LIABILITIES &
BONDS FOR 2025-2026
ACC 308 Week 6 Chapter 14

ACC 308 Week 6 Chapter 14

ACC 308




study guide / test bank




grade-A
official revision




Study Guide - ACC 308 Week 6 Chapter 14 Long-Term Liabilities & Bonds FOR 2025-2026 - Page 1

, ACC 308 ACC 308 Week 6 Chapter 14


TABLE OF CONTENTS
STUDY
GUIDE

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1. Important Terms and Definitions resources
2. Study Questions and Answers
3. study guide / test bank




grade-A
official revision




Study Guide - ACC 308 Week 6 Chapter 14 Long-Term Liabilities & Bonds FOR 2025-2026 - Page 2

, ACC 308 ACC 308 Week 6 Chapter 14


study guide / test bank
STUDY
GUIDE

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1. ('What is a secured bond?', 'A bond backed by collateral.') resources


2. ('What is an unsecured bond (debenture)?', 'A bond not backed by collateral.')

3. ('What is yield to maturity (YTM)?', 'The effective annual return if bond is held to maturity.')

4. ('What is the effective interest rate?', 'The true cost of borrowing considering discount/premium.')

5. ('What is a covenant?', 'A restriction placed on the borrower to protect bondholders.')

6. ('What is the difference between short-term notes payable and bonds payable?', 'Maturity
length—short-term < 1 year, bonds are long-term.')

7. ('How is the price of a bond determined?', 'By the present value of future cash flows discounted at
the market rate.')

8. ('What two cash flows are considered in bond pricing?', 'Periodic interest payments and
repayment of principal.')

9. ('What is the present value of the principal payment?', 'Face value × Present value of $1 factor.')

10. ('What is the present value of interest payments?', 'Interest payment × Present value of annuity
factor.')

11. ('How is bond interest expense affected by a discount?', 'It is higher than cash paid because the
discount is amortized.')


premium is amortized.') grade-A
12. ('How is bond interest expense affected by a premium?', 'It is lower than cash paid because the


13. ('What entry is made when bonds are issued between interest dates?', 'Debit Cash, Credit Bonds
Payable, Credit Interest Payable.')

14. ('Why are bonds issued between interest dates?', 'To align payment schedules with standard
interest dates.')

15. ('How are bond issue costs recorded under GAAP?', 'As a deferred charge, amortized over bond
life.')

16. ('What happens if bonds are retired at more than carrying value?', 'A loss on bond retirement is
recorded.')

17. ('What happens if bonds are retired at less than carrying value?', 'A gain on bond retirement is
recorded.')

18. ('What is the journal entry to record bond interest payment?', 'Debit Interest Expense, Credit
Cash.')

19. ('What is an example of an adjunct account?', 'Premium on Bonds Payable.')

20. ('What is an example of a contra account?', 'Discount on Bonds Payable.')

21. ('What is the relationship between coupon rate and bond price?', 'Inverse with market rate.')
official revision




22. ('If the market rate > coupon rate, what happens?', 'Bond sells at a discount.')

23. ('If the market rate < coupon rate, what happens?', 'Bond sells at a premium.')

24. ('What is the carrying amount of a bond at maturity?', 'Always equals the face value.')

25. ('What type of liability are bonds reported as?', 'Long-term liability unless due within one year.')
Study Guide - ACC 308 Week 6 Chapter 14 Long-Term Liabilities & Bonds FOR 2025-2026 - Page 3