1. The market value of an available-for-sale security has declined from the last carrying value. The journal entry to record this decline will include: A) a credit to the Unrealized Gain on Investment. B) a debit to the Unrealized Loss on Investment. C) a credit to the Allowance to Adjust Investment to Market. D) both A and C

2. On December 1, 20X7, a company receives $2,400 in advance for an agreement to care, in equal monthly efforts, for a clients office plants during the months of December, January, and February. As of December 31, 20X7, the company would have:

A) a $1,600 liability to its client under accrual accounting, or a $2,400 liability to its client under cash-basis accounting.B) recognized $800 cash under accrual accounting, or $2,400 cash under cash-basis accounting.C) a $0 liability to its client under accrual accounting, or a $1,600 liability to its client under cash-basis accounting. D) recognized $800 revenue under accrual accounting, or $2,400 revenue under cash- basis accounting.

3. A company issued $100,000 of 10% 5-year bonds on January 1, 2019. The bonds pay interest semiannually on January 1 and July 1, starting July 1, 2019. The company has a fiscal year end of May 31. On May 31, 2019, the company will:

A) make a journal entry to accrue interest expense from January 1 through May 31, 2019.B) make a journal entry to accrue interest expense from July 1 through December 31, 2019.C) not need to make a journal entry on May 31, 2019.D) make a journal entry to accrue interest expense from January 1 through July 1, 2019.

4. Which of the following statements about discount on bonds payable is NOT true?

A) Discount on bonds payable decreases the companys liabilities. B) Discount on bonds payable is a contra account to bonds payable. C) Adding the discount account to the bonds payable account yields the carrying amount of the bonds. D) Subtracting the discount account from the bonds payable account yields the carrying amount of the bonds.

5. Under the effective-interest method of amortizing bond premium, the interest expense recorded for each semiannual interest payment:

A) will equal the amount of cash paid for each semiannual interest payment. B) is equal to the carrying value of the bond times the contract rate of interest for each semiannual interest period. C) is at the same percentage of the bond's carrying value for every interest payment. D) will increase over the life of the bond.