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On a classified balance sheet, the financial statement user will be able to distinguish between:

Select one:

a. Cash Flow from Operating and Investing activities.

b. Product and Period Costs.

c. Current and Long-Term Assets.

d. None of the above.

Question 37

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On January 1, 2015, a company borrowed a 5-year installment note totaling $50,000 from a bank. The note had an interest rate of 8% and annual payments of $12,523 due on the last day of the year. What is the correct journal entry to record the loan payment on December 31, 2015?

Select one:

a.

Interest Expense		$12,523
Cash			$12,523

b.

Notes Payable		$12,523
Cash			$12,523

c.

Interest Expense		$4,000
Notes Payable		$8,523
Cash			$12,523

d.

Interest Expense		$4,000
Notes Payable		$12,523
Notes Payable			$16,523

Question 38

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On January 1, 2015, a company issued $100,000 of 10-year bonds with a stated interest rate of 6%. The bonds were issued at 104. The company pays the interest annually on December 31 and uses the straight-line amortization method. What is the correct journal entry to record the interest payment in 2015?

Select one:

a.

Interest Expense			$6,000
Premium on Bonds Payable				$400
Cash				$5,600

b.

Interest Expense			$5,600
Premium on Bonds Payable			$400
Cash				$6,000

c.

Interest Expense			$6,400
Premium on Bonds Payable				$400
Cash				$6,000

d.

Interest Expense			$6,000
Cash				$6,000

Question 39

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On an installment notes payable, in which each payment includes a portion of interest and principal, what happens to the interest expense each year?

Select one:

a. The payment has no effect on interest expense each year.

b. The amount of interest expense will increase each year.

c. The amount of interest expense will decrease each year.

d. None of the above.

Question 40

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Policies and procedures designed to reduce the opportunities for fraud are often called:

Select one:

a. Internal Controls

b. Accounting Principles

c. Asset Source Transactions

d. Financial Systems

Answer 1