Question

QUESTION 1

When the interest payments dates of a bond are May 1 and November 1, and the bond is issued on June 1, the amount of interest expense at December 31 of the year of issuance would be for

a.	two months
b.	six months
c.	seven months
d.	eight months

QUESTION 2

The term 'intangible assets' is used in accounting to denote

a.	current or noncurrent property items without physical characteristics
b.	assets with lesser economic significance because of the nature of such assets
c.	properties without physical characteristics that have long-term effects on a business enterprise
d.	such items as patents, copyrights, and claims against customers which can be valued on a monetary basis

Answer 1

Question 1

c. Seven months

Interest expense is from the time of issue of bonds to the end of the accounting period. That is 7 months from June 1 to December 31.

Question 2

The term 'intangible assets' is used in accounting to denote;

c. Properties without physical characteristics that have long-term effects on a business enterprise.

Intangible assets cannot be seen, touch or smell but its effect in the business have a long term nature. Examples for intangible assets are goodwill, patents, copyrights etc