Choose the best response to the following multiple choice questions:

1. All of the following are current liabilities except:

a. Unearned revenue

b. Accrued liabilities

c. Prepaid insurance

d. Current maturities of long-term debt 2. Jason Company received $5,000 from customers in advance. The company recorded this receipt to cash and to sales revenue. What effect does this incorrect entry have on the company’s financial position?

a. Assets are overstated; liabilities are understated; stockholders’ equity is overstated.

b. No effect on assets; liabilities are understated; stockholders’ equity is overstated.

c. Assets are understated; liabilities are understated; stockholders’ equity is overstated.

d. No effect on assets, liabilities, or stockholders’ equity.

3. At December 31, Daniels Chocolate Company owes $200,000 under a 20-

year mortgage to Interstate Industrial Bank. Approximately $11,000 of principal is due and payable the next year. How should the liability be reported on the December 31 balance sheet?

a. All of the $200,000 should be reported as a long-term liability and nothing reported as a current liability.

b. All of the $189,000 should be reported as a long-term liability and

$11,000 as a current liability.

c. All $200,000 should be reported as a current liability.

d. Of the $200,000, only report $189,000 as a long-term liability and nothing as a current liability?  LOP9