Topic Area: Ratio analysis-Accounts payable turnover
42.
Which of the following transactions will decrease the accounts payable turnover ratio?
43.
Which of the following statements incorrectly describes the accounts payable turnover ratio?
44.
Which of the following best describes the accrual of interest?
45.
On October 1, 2016, Donna Equipment signed a one-year, 8% interest-bearing note payable
for $50,000. Assuming that Donna Equipment maintains its books on a calendar year basis,
how much interest expense should be reported in the 2017 income statement?
46.
Phipps Company borrowed $25,000 cash on October 1, 2016, and signed a nine-month, 8%
interest-bearing note payable with interest payable at maturity. Assuming that adjusting
entries have not been made during the year, the amount of accrued interest payable to be
reported on the December 31, 2016 balance sheet is which of the following?
47.
Miranda Company borrowed $100,000 cash on September 1, 2016, and signed a one-year 6%,
interest-bearing note payable. Assume no adjusting entries have been made during the year.
Which of the following would be the required adjusting entry at the end of the December 31,
2016 accounting period?
48.
Melanie Corp. borrowed $100,000 cash on September 1, 2016, and signed a one-year 6%,
interest-bearing note payable. The interest and principal are both due on August 31, 2017.
Assume that the appropriate adjusting entry was made on December 31, 2016 and that no
adjusting entries have been made during 2017. Which of the following would be the required
journal entry to pay the note on August 31, 2017?
49.
Phipps Company borrowed $25,000 cash on October 1, 2016, and signed a nine-month, 8%
interest-bearing note payable with interest payable at maturity. The amount of interest
expense to be reported during 2017 is which of the following?
50.
Thomas Company decided to borrow $30,000 on March 1st, 2016. Thomas signed a 2-year 6%
interest-bearing note. What is the adjustment amount to accrue interest on December 31,
2017?
2017.
51.
Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest–
bearing note payable. The interest and principal are both due on March 31, 2017.
52.
Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest-
bearing note payable. The interest and principal are both due on March 31, 2017.
Assume that the appropriate adjusting entry was made on December 31, 2016 and that no
adjusting entries have been made during 2017. What is the amount of interest expense to be
recorded when the interest and principal are paid on March 31, 2017?
53.
Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest–
bearing note payable. The interest and principal are both due on March 31, 2017.
What is the amount to be paid to the bank on March 31, 2017 for interest and principal?
54.
Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest–
bearing note payable. The interest and principal are both due on March 31, 2017.
Assume that no adjusting entries had been made before December 31, 2016. Which of the
following would be the required adjusting entry on December 31, 2016?
55.
Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest–
bearing note payable. The interest and principal are both due on March 31, 2017.
Assume that the appropriate adjusting entry was made on December 31, 2016 and that no
adjusting entries have been made during 2017. Which of the following would be the required
journal entry to pay the entire amount due on March 31, 2017?
56.
Failure to make a necessary adjusting entry for accrued interest on a note payable would
result in which of the following?
57.
Which of the following would not be a result of the adjusting entry to record accrued interest
on a note payable?
58.
The accrual of interest results in the following:
59.
Which of the following statements is incorrect?
60.
Purdum Farms borrowed $10 million by signing a five-year note on December 31, 2015.
Repayments of the principal are payable annually in installments of $2 million each. Purdum
Farms makes the first payment on December 31, 2016 and then prepares its balance sheet.
What amount will be reported as current and long-term liabilities, respectively, in connection
with the note at December 31, 2016, after the first payment is made?
61.
How should a contingent liability that is reasonably possible but cannot reasonably be
estimated be reported within the financial statements?
62.
Young Company is involved in a lawsuit. When would the lawsuit be recorded as a liability on
63.
Houston Company is involved in a lawsuit. In which of the following situations is only a note
disclosure of the contingent liability reported within the financial statements?
64.
Which of the following statements about contingent liabilities is incorrect?
65.
Rice Corporation’s attorney has provided the following summaries of three lawsuits against
Rice:
• Lawsuit A: The loss is probable, but the loss cannot be reasonably estimated.
• Lawsuit B: The loss is reasonably possible, but the loss cannot be reasonably estimated.
• Lawsuit C: The loss is reasonably possible and can be reasonably estimated.
Which of the following statements is correct?
66.
Rice Corporation’s attorney has provided the following summaries of three lawsuits against
Rice:
• Lawsuit A: The loss is probable, but the loss cannot be reasonably estimated.
• Lawsuit B: The loss is reasonably possible, but the loss cannot be reasonably estimated.
• Lawsuit C: The loss is reasonably possible and can be reasonably estimated.
Which of the following statements is incorrect?
67.
Darwin Corporation’s attorney has provided the following summaries of three lawsuits against
Darwin:
• Lawsuit A: The loss is probable and the loss can be reasonably estimated.
• Lawsuit B: The loss is reasonably possible and the loss cannot be reasonably estimated.
• Lawsuit C: The loss is reasonably possible and the loss can be reasonably estimated.
Which of the following statements is incorrect?