1) If interest is compounded annually, the total amount of interest on an $18,000 note payable for four years at 10% is

a.$8,500.

b.$8,352.

c.$5,706.

d.$7,200.

2) Which of the following statements about current liabilities is true?

a.The current ratio is defined as current assets divided by current liabilities.

b.The amount of current liabilities has little implication for a company's liquidity.

c.The Current Liabilities section never contains any portion of long-term liabilities.

d.Current liabilities are listed in order of decreasing amounts in the Current Liabilities section of the balance sheet.

3) Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.)

Did the company purchase any intangible assets during the year?

a.Statement of retained earnings

b.Income statement

c.Balance sheet

d.Statement of cash flows

4) Wexford Co. purchased a new delivery truck at the beginning of 2017. The truck has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2017. The truck was driven 20,000 miles during 2017 and 24,000 miles during 2018. The number of expected miles over five years is 100,000.

Refer to the information for Wexford Co.

By what amount would double-declining-balance depreciation exceed straight-line depreciation over the five-year life of the truck?

a.Cost less total depreciation

b.Cost plus total depreciation

c.The residual value of $7,000

d.Total depreciation expenses under double-declining-balance and straight-line depreciation are equal.

5) Which of the following items is added to net income to determine cash flows from operating activities when the indirect method is used to prepare the Operating Activities category of the statement of cash flows?

a.Cost of plant assets acquired during the year

b.Depreciation expense

c.Cash from note payable related to truck acquired

d.Accumulated depreciation