Question

Choose the appropriate letter to match the term and the definition. Not all definitions will be used.

Term:

1. _____ Current liabilities

2. _____ Effective interest method of amortization

3. _____ Straight-line method of amortization

4. _____ Times interest earned ratio

5. _____ Long-term liabilities

6. _____ Present value

Definition:

A. A bond feature that puts a creditor ahead of other creditors in order of payment.

B. Current liabilities divided by current assets.

C. These are liabilities that have to be paid in one year or less.

D. Net income before taxes and interest expense divided by interest expense.

E. Spreads a bond discount or premium evenly over the lifetime of the bond.

F. The amount of all the liabilities currently on the balance sheet at the close of the period.

G. Where interest expense is the market interest rate times the bond's carrying value.

H. Net income after taxes and interest expense divided by interest expense.

I. These are liabilities that do not have to be paid within the upcoming year.

J. The ability to pay current obligations.

K. Liquid assets divided by current liabilities.

L. A calculation that determines what some future payments are worth today.

Answer

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