Chicago Company sold merchandise to a customer for $600 cash in a state with a 6% sales tax rate. The total amount of cash collected from the customer was

$558.

$600.

$642.

$636.

Nevada Company paid to the state $1,800 in sales tax that it had previously collected from customers. What type of transaction was this?

Asset source

Asset use

Asset exchange

Claims exchange

How does the amortization of the principal balance affect the amount of interest expense recorded each succeeding year?

Has no effect on interest expense each succeeding year

Increases the amount of interest expense each succeeding year

Reduces the amount of interest expense each succeeding year

The effect depends on the interest rate.

Long-term debt would likely be used for which of the following?

acquisition of inventory

paying premiums for insurance

purchasing a building

paying salaries

Bonds payable are usually classified on the balance sheet as:

long-term liabilities.

current liabilities.

investments and funds.

other assets.

When does warranty cost appear on the statement of cash flows?

When there is a settlement of a warranty claim made by a customer.

When the warranty obligation is recognized.

When merchandise is sold.

None of these.