42. A company purchased a machine for $250,000 on 6/1/20x1. As of today, the accumulated depreciation on the machine is $190,000 and it is sold for a cash proceed. Which of the following statements is TRUE regarding the disposal of the machine?

A. It decreases total assets.

B. It increases net assets.

C. A gain or loss on the disposal can occur.

D. There is no effect on net income.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

43. Assume that bonds are issued at a premium. Which of the following statement is TRUE?

A. The quoted bond price is less than 100.

B. The market interest rate is greater than the stated interest rate.

C. The book value of the bonds will increase during the term of the bonds.

D. Interest expense will decrease during the term of the bonds.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

44. If bonds are issued at a discount, over the term of the bonds, the:

A. carrying value of the bonds will decrease.

B. interest expense will increase.

C. interest payment will decrease.

D. carrying value of the bonds at maturity will be lower than the face value.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

45. A $50,000 machine is purchased by paying $15,000 cash and signing a note payable for the remainder. The journal entry should include a

A. Credit to note payable.

B. Debit to cash.

C. Credit to notes receivable.

D. Credit to machinery.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

46. The right to collect cash in the future is called a(n)

A. Account payable.

B. Account receivable.

C. Unearned revenue.

D. Prepaid expense.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

47. Which of the following statements are TRUE regarding temporary accounts?

A. Their balances are carried over to the next accounting period.

B. They are closed into Net income at the end of each accounting period.

C. Examples include Cash, Inventories, Prepaid expense and Unearned revenue.

D. Their beginning balances are always zeros.

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.

48. Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

A. selling inventory on account

B. issuing stock for cash

C. borrowing money from the bank

D. collecting cash from customers

Your answer (A, B, C, or D)

Explain the reason(s) for your choice in detail.