Chapter 6

Financial Assets

PROBLEM 6-1: TRUE OR FALSE

1. FALSE
2. FALSE
3. FALSE
4. FALSE
5. TRUE
6. FALSE – the bond coverage shall not be less than the cash
accountability.
7. FALSE
8. FALSE
9. TRUE
10. TRUE

PROBLEM 6-2: MULTIPLE CHOICE

1. D
2. A
3. B
4. A
5. C
6. B
7. D
8. A
9. C
10. A
PROBLEM 6-3: MULTIPLE CHOICE
1. B
2. D
3. A
4. C (1,456,792 + 125,919) = 1,582,711
5. A (1,582,711 x 14%) = 221,580

6. C
Date Collections Interest income Amortization Present value
1/1/x1 1,582,711
12/31/x1 200,000 221,580 21,580 1,604,291

(1,800,000 – 1,604,291) = 195,709 gain

7. A
8. B
9. A
10. B

PROBLEM 6-4: FOR CLASSROOM DISCUSSION

1. C
2. D
3. C
4. D
5. C
6. C
7. B
Per books, end. 100
Add: CM
Less: DM (20)
Adjusted balance 80

8. B
9. B
10. A