Munson Company issued an interest-bearing note payable with a face - 18085

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1.
The party who borrows money in a note payable is known as the
    Maker.
    Issuer.
    Payee.
    Both A and B.


2.
Munson Company issued an interest-bearing note payable with a face amount of $6,000 and a stated interest rate of 8% to the Capital Bank on August 1, 2013. The note carried a one-year term.

The amount of cash flow from operating activities on the 2013 statement of cash flows would be:
    $480.
    $200.
    $6,000.
    zero.

3.
Issuing a note payable is a(n)
    claims exchange transaction.
    asset source transaction.
    asset use transaction.
    asset exchange transaction.


4.

Monthly remittance of sales tax:
    Reduces stockholders' equity.
    Is a claims exchange transaction.
    Reduces liabilities.
    All of the above.
5.
In December 2013, Lucky Corporation sold merchandise for $5,000 cash. Lucky estimated that $350 of warranty claims might be filed in regard to these sales. On February 12, 2014, warranty work amounting to $275 was performed for one of the customers ($215 labor paid in cash and $60 from the materials inventory).

Which of the following reflects the effect of the year-end adjusting entry to record estimated warranty expense?
 
Assets    =    Liab.    +    Equity    Rev.    Exp.    =    Net Inc.    Cash Flows
 
A.    -    =    NA     +    -    NA    -    =    -    -  OA
     
B.    NA    =    +     +    -    NA    +    =    -    NA
       
C.    NA    =    -     +    +    NA    +    =    -    -  OA
   
D.    -    =    NA     +    -    NA    +    =    -    NA
    Option A
    Option B
    Option C
    Option D

6.
What is the purpose of the Federal W-4 form?
    To allow an employee to lessen the amount of federal tax withheld due to withholding allowances.
    To notify the federal government when a new employee is hired.
    To remit monthly payments for FICA to the federal government.
    To notify the employee at year-end of the amount of federal tax withheld.


7.
Which of the following items is not classified as a current asset?
    Accounts Receivable.
    Merchandise Inventory.
    Office Equipment.
    Prepaid Rent.


8.
On a classified balance sheet, the financial statement user will be able to distinguish between:
    cash flow from operations and cash flow from investing activities.
    product and period costs.
    current and non-current assets.
    none of these.

9.
Which of the following items would be least likely to appear in the current liabilities section of a classified balance sheet?
    Bonds Payable.
    Wages Payable.
    Accounts Payable.
    Interest Payable.

10.
A company's classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. The company's current ratio is:
    0.69 to 1
    1.16 to 1
    1.44 to 1
    3.26 to 1


11.

The following information is taken from the balance sheet of Alberta Company:
 
  Current assets    $   960             Current liabilities    $   600  
  Property, Plant & Equip.    1,450             Noncurrent liabilities    770  
  Total assets    $2,410             Total liabilities    $1,370  
 
Alberta Company's current ratio is:
    2.5 to 1
    1.6 to 1
    1.76 to 1
    .66 to 1

12-13
Violet Company issued a $30,000 face value discount note payable to the First Federal Bank on September 1, 2012. The note carried a one-year term and a 4% discount rate. Assume interest is payable at maturity.

12.
As a result of the recognition of interest expense on 12/31/12,
    liabilities will increase and assets will decrease.
    assets and liabilities will decrease.
    assets will increase and retained earnings will increase.
    liabilities will increase and retained earnings will decrease.

13.
The amount of interest expense appearing on the 2012 income statement would be:
    $1,200.
    $400.
    $800.
    $2,400.

14.
How does the going concern assumption affect accounting for notes payable?
    It dictates that interest expense be accrued at the end of the accounting period.
    It dictates that notes payable be reported at their face value.
    It dictates that notes payable be reported at their net realizable value.
    It dictates that interest expense be paid when the note matures.


15.
Hamm Co. borrowed $10,000 from Townsend Co. on March 1, 2013. Hamm is to repay the principal and interest on March 1, 2014. The interest rate is 8%. If the year-end adjustment is properly recorded, what will be the effects of the accrual on Hamm's 2013 financial statements?
    Increase assets and increase liabilities
    Increase assets and increase revenues
    Increase liabilities and increase expenses
    No effect


16.
Ramon Company borrowed $18,000 on April 1, 2013 from the Lone Star Bank. The note issued by Ramon carried a one year term and a 7% annual interest rate. Ramon earned cash revenue of $850 in 2013 and $700 in 2014. Assume no other transactions, and interest is payable at maturity.

The amount of net income on the 2014 income statement would be:
    $315.
    $385.
    $(95).
    $945.

17.
Which of the following represents the correct journal entry to record a taxable cash sale of $800 if the sales tax rate is 5%?
    A debit to cash for $840, a debit to sales tax expense for $40, and a credit to sales revenue for $800.
    A debit to cash for $840, a credit to sales tax payable for $40, and a credit to sales revenue for $800.
    A debit to cash for $800, a credit to sales tax payable for $40, and a credit to sales revenue for $760.
    None of the above.

18.
Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet?
    The outcome is reasonably possible.
    The outcome is probable.
    The amount can be reasonably estimated.
    Both B and C.

19.
Bacchus Co. had sales of $400,000 in 2013. The company expects to incur warranty expenses amounting to 3% of sales. There were $6,500 of warranty obligations paid in cash during 2013. Based on this information:
    Warranty expenses would decrease net earnings by $12,000 in 2013.
    Assets would decrease by $6,500 as a result of the accounting events associated with warranties in 2013.
    Total warranty obligations would increase by $5,500 in 2013.
    All of these.


20.
The current ratio is a measure of:
    Solvency.
    Profitability.
    Equity.
    Liquidity.




                                       

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