Question :
68.The amount of interest expense appearing the 2012 income statement : 1254546
68.The amount of interest expense appearing on the 2012 income statement would be:
A. $1,200.
B. $400.
C. $800.
D. $2,400.
69.As a result of the recognition of interest expense on 12/31/12,
A. liabilities will increase and assets will decrease.
B. assets and liabilities will decrease.
C. assets will increase and retained earnings will increase.
D. liabilities will increase and retained earnings will decrease.
70.The carrying value of the liability appearing on the 12/31/12 balance sheet will amount to:
A. $26,800
B. $29,200
C. $30,000
D. $29,600
The Bowers Company issued a $9,000 face value discount note on March 1, 2013. The note carried a 5% discount rate and a one-year term to maturity.
71.How would the adjusting entry to record interest expense on December 31, 2013 affect the financial statements?
A. Option A
B. Option B
C. Option C
D. Option D
72.After accruing all interest expense due as of April 1, 2013, Bowers Company made the cash payment for the full amount due (i.e., principal and interest) to Mid-Rivers Bank. Select the answer that shows how the cash payment will affect Bowers’ financial statements.
A. Option A
B. Option B
C. Option C
D. Option D
73.The amortization of the discount on a note payable has what effect on a company’s financial statements?
A. Increases interest expense and increases liabilities.
B. Decreases interest expense and increases liabilities.
C. Increases interest expense and decreases liabilities.
D. Decreases interest expense and decreases liabilities.
74.Choose the correct answer to complete the following: Discount notes….
A. are recorded in the account “notes payable” at face value on the day of issue.
B. are recorded in the account “notes payable” at more than face value on the day of issue.
C. are recorded in the account “notes payable” at less than face value on the day of issue.
D. are not recorded until the maturity date.
75.Carnegie Company experienced an accounting event that is recorded in the following T-accounts: Which of the following choices accurately reflects how this event would affect Carnegie’s financial statements.
A. Option A
B. Option B
C. Option C
D. Option D
76.Which of the following accounts appear in the liabilities section of the balance sheet?
A. Warranties payable, discounts on notes payable, accounts payable.
B. Accounts payable, notes payable, allowance for doubtful accounts.
C. Notes payable, discounts on notes payable, credit card receivables.
D. Accounts payable, allowance for doubtful accounts, warranties payable.
77.On October 1, 2013, Beacon Corporation borrowed $10,000 from First Bank by signing a one-year, 6% note. On December 31, 2013 Beacon failed to make the adjusting entry to accrue the related interest. This error will cause:
A. Net income for 2013 to be overstated and liabilities for 2013 to be overstated.
B. Net income for 2013 to be understated and net income for 2014 to be overstated.
C. Net income for 2014 to be understated and liabilities for 2013 to be understated.
D. Net income for 2013 to be understated and liabilities for 2013 to be overstated.
78.What type of account is Discount on Notes Payable?
A. Liability.
B. Contra liability.
C. Contra asset.
D. Expense.
