1) 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?

A.	A disclosure note is required for lawsuit A.

B.	A disclosure note is required for lawsuit C.

C.	A disclosure note is not required for lawsuit B.

.

D) Lawsuit A is reported on the balance sheet as a liability.

2) 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?

A.	When the loss is remote and the amount cannot be reasonably estimated.

B.	When the loss is probable and the amount can be reasonably estimated.

When the loss is reasonably possible and the amount can be reasonably estimated.

D.	When the loss is remote and the amount can be reasonably estimated.

3) Failure to make a necessary adjusting entry for accrued interest on a note payable would result in which of the following?

A.	Liabilities and stockholders' equity would both be understated.

B.	Net income would be overstated and assets would be understated.

C.	Net income would be understated and liabilities would be understated.

D.	Net income and stockholders' equity would be overstated and liabilities would be understated.

4) SRJ Corporation entered into the following transactions: The accrual of interest expense on a six-month note payable. Collected cash for services to be provided within the next six months. The reclassification of short-term debt to long-term debt. Which of the following statements is correct with respect to determining the net cash flow from operating activities on a statement of cash flows?

A.	The increase in interest payable for the accrual of interest expense is added to net income.

B.	Collecting cash for services to be provided in the future is subtracted from net income.

C.	The reclassification of short-term debt to long-term debt is subtracted from net income.

D.	Collecting cash for services to be provided in the future does not require an adjustment to net income.

5) Short Company purchased land by paying $10,000 cash on the purchase date and agreeing to pay $10,000 for each of the next ten years beginning one-year from the purchase date. Short's incremental borrowing rate is 10%. The land reported on the balance sheet is closest to:

A.

$100,000.

B.

$38,550.

C.

$110,000.

D.

$71,446.

.

6) Rae Company purchased a new vehicle by paying $10,000 cash on the purchase date and agreeing to pay $3,000 every three months during the next five years. The first payment is due three months after the purchase date. Rae's incremental borrowing rate is 12%. The vehicle reported on the balance sheet as of the purchase date is closest to:

A.

$44,633.

B.

$50,000.

C.

$54,633.

D.

$60,000.

7) Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a note agreement with Kenworthy on January 1, 2014. Alden financed $37,908,000, and the note agreement will require $10 million in annual payments starting on December 31, 2014 and continuing for a total of four more years (final payment December 31, 2018). Kenworthy will charge Alden Trucking Company the market interest rate of 10% compounded annually. After the first payment was made, the note and interest payable liability on December 31, 2014 is closest to:

A.	$32,908,000.

B.	$31,698,800.

C.	$40,000,000