Exam 10: Reporting and Analyzing Liabilities

Use the following information for questions On January 1 of this year, Gertoni Lenders agrees to lend Ester Corp.$150,000.Ester Corp.signs a $150,000, 6%, 9-month loan.Interest is due at maturity. -The entry made by Ester Corp.on January 1 to record the receipt of the loan is

Interest expense is based on the ___ interest rate and the carrying amount of a bond while the interest paid is based on the ___ interest rate and the face value of the bond.

Which of the following is not a financial liability?

A five-year, 4%, $102,000 note payable is issued on January 1.Terms include equal annual instalment payments of $22,912.The entry to record the first instalment payment will include a

Failure to record a liability will probably

McMichael Exhibits Inc.received its annual property tax bill for $26,200 in January.It was paid when due on March 31.McMichael Exhibits year end is Dec 31.The Dec 31 balances should be

Which of the following is not an example of a non-current liability with instalment payments?

Which of the following statements is false?

Which of the following statements is true?

Use the following information to answer questions Angel Eyes Corporation operates on a calendar year basis.The company is in its first year of operations and received its annual property tax bill on March 31 for $21,000.The bill is due May 1.Even though the company records adjusting entries on a monthly basis, no entries related to property taxes have been recorded. -Assuming appropriate adjusting entries were completed for the April month end, what entry should be recorded for the payment on May 1?

If bonds are issued at a discount, the issuing corporation will pay a principal amount that is less than the face amount of the bonds on the maturity date.

Roofer's Inc.had an operating line of credit of $100,000 and overdrew its bank balance to result in a negative cash balance of $33,000 at year-end.This would be reported in the statement of financial position as

If interest is due at maturity, a $50,000, 4%, 9-month note payable requires an interest payment of

Which of the following credit ratings is regarded as speculative or indicative of a high degree of risk?

The face value of a bond is the amount of principal and interest due at the maturity date.

Which of the following statements is true?

If a company's fiscal year is the same as the calendar year used for property tax purposes, there should be no prepaid property tax on its year-end financial statements but there may be a property tax liability.

A measure of a company's solvency is the

Interest expense on a note payable, with interest due at maturity, is

Amounts available to be drawn in the future from an operating line of credit improve a company's liquidity.