Question 1.

Short-term notes payable:

Select one:

a. are shown on the balance sheet with current liabilities

b. are shown as a reduction to notes receivable on the balance sheet, with an appropriate footnote disclosure

c. are generally due within three months, with a maximum time period of six months

d. are shown on the balance sheet after bonds payable

Question 2.

Nitrogen Company reported Insurance Expense for the year ended December 31, 2017, of $37,490. During the same period, the Prepaid Insurance account decreased $4,610. The payments for insurance during the year ended December 31, 2017, were:

Select one:

a. $42,100

b. $46,710

c. $32,880

d. $37,490

Question 3.

Prevage Corporation has 10,000 shares of $10 cumulative preferred shares outstanding and 50,000 common shares outstanding. As of the beginning of this fiscal year, there were 2 years' dividends in arrears on the preferred shares. The board of directors wants to give the common shareholders a $1.50 dividend per share at the end of this fiscal year. The total dividends to be declared by the Prevage Corporation are

Select one:

a. $105,000

b. $175,000

c. $120,000

d. $375,000

Question 4.

A repair to an appliance under warranty occurs within the warranty period. What adjustment is made?

Select one:

a. Repair Expense is debited

b. Warranty Expense is debited

c. Estimated Warranty Payable is credited

d. Estimated Warranty Payable is debited

Question 5.

In a corporation, the two basic sources of shareholders' equity are

Select one:

a. share capital and operating capital

b. donated capital and share capital

c. donated capital and retained earnings

d. share capital and retained earnings

Question 6.

Using the indirect method of preparing a statement of cash flows, a loss on the sale of a capital asset is:

Select one:

a. added in the investing activities section

b. added in the operating activities section

c. subtracted in the operating activities section

d. ignored

Question 7.

The sale of equipment at book value (for cash) would be reported on a statement of cash flows under:

Select one:

a. the financing activities

b. the investing activities

c. either investing activities or financing activities

d. the operating activities

Question 8.

On July 1, 2016, Cargo Corporation issues $4,000,000 of 10-year bonds dated July 1, 2016, at 100 1/2 when the market rate of interest was 8%. Cargo Corporation uses the effective-interest method of amortization. Interest is paid each June 30 and December 31. The entry to record the first semi-annual interest payment on December 31, 2016, will include a

Select one:

a. credit to Premium on Bonds Payable for $320,000

b. debit to Premium on Bonds Payable for $321,600

c. debit to Interest Expense for $160,800

d. credit to Interest Payable for $160,000

Question 9.

The journal entry to record accrued interest on a short-term note payable must include a

Select one:

a. debit to Interest Expense

b. credit to Interest Expense

c. debit to Interest Payable

d. debit to Note Payable

Question 10.

If a corporation issues only one class of shares, it must be

Select one:

a. preferred

b. common or preferred

c. common

d. par value