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Chapter 07 Accounting for and Presentation of Liabilities Answer Key
Multiple Choice Questions
1.
A transaction that is likely to cause an increase in a current liability is:
2.
The payment of a current liability will:
3.
A working capital loan will generally:
4.
Computing a borrower's effective interest rate is another application of which of the
following concepts?
5.
Which of the following is a true statement regarding interest calculation methods?
6.
A loan discount is:
7.
Cassady, Inc. borrowed $25,000 for 3 months at an APR of 10%. The amount of interest
paid on this loan was:
8.
Bonner's, Inc. borrowed $36,000 for 4 months on a discount basis. The lender used an
interest rate of 8% to calculate the discount. The amount of cash Bonner's, Inc. actually
had available to use from this loan was:
9.
When borrowing money, the most important objective of the borrower should be to:
10.
Interest on a Note Payable is most appropriately accrued:
11.
Current maturities of long-term debt:
12.
The purpose of reporting Current Maturities of Long-Term debt is to:
13.
When a supplier makes a downward adjustment in the amount owed by a creditor, the
creditor will:
14.
A magazine publisher has an account called "Unearned Subscription Revenue." The
transaction that causes the balance of this account to decrease is:
15.
The adjusting entry to accrue Interest Expense results in:
16.
Many current liabilities are affected by accrual accounting entries. This happens because:
17.
Which of the following is
not
usually associated with bonds?
18.
An Accounts Payable normally results from which of the following transactions?
19.
The current liability for Wages Payable (or Accrued Payroll) represents the:
20.
The financial leverage characteristic of long-term debt results in:
21.
When a company issues a bond at a premium:
22.
Which of the following is
not
sometimes associated with bonds?
23.
If the market price of a bond exceeds its face amount:
24.
The market value of a bond is the sum of the present value of future interest payments
and the present value of the amount to be repaid at maturity, discounted at:
25.
Financial leverage refers to which of the following?
26.
When a company issues a bond at a discount:
27.
When bonds are issued at a premium:
28.
Which of the following is(are) a true statement(s) pertaining to bonds?
29.
Which of the following is true regarding bond discounts and/or premiums?
30.
The amortization of bond discount:
31.
Southern Company's accountant failed to accrue as of 12/31/16 some employee fringe
benefit program expenses that were incurred in 2016 and that will be paid in 2017. The
result of this omission is to:
32.
Southern Company's accountant failed to accrue as of 12/31/16 some employee fringe
benefit program expenses that were incurred in 2016 and that will be paid in 2017. The
result of this omission is to:
33.
The largest item of the Deferred Tax Liability for most companies is caused by:
34.
The noncurrent Deferred Tax Liability account arises because:
