1. Star Corporation purchased a piece of land, paying $2,000,000 cash and financing $9,000,000 of the purchase price with a 10-year, 10% installment note. The note calls for equal monthly payments that will result in the debt being completely repaid by the end of the tenth year. In this situation: A. the aggregate amount of the monthly payments is $9,000,000. B. each monthly payment is lower than the amount of interest accruing each month. c. the portion of each payment representing interest expense will decrease over the 10- year period, since principal is being paid off, yet the payment amount does not decrease. D. the portion of each monthly payment representing repayment of principal remains the same throughout the 10-year period. 2. A company has 3,000 ordinary shares outstanding, with share capital of $30,000 and share premium of $150,000. A 3-for-1 share split will: A. decrease the number of ordinary shares outstanding to 1,000 only. B. increase the share premium to $90,000. C. not affect the number ordinary shares outstanding. D. decrease par value per ordinary share to $3.33. 3. Which of the following adjusting entries is/are correct? I. Accumulated Depreciation Depreciation Expense II. Prepaid Rent Rent Expense III. Rent Revenue Unearned Rent Revenue IV. Income Tax Expense Income Tax Payable A. IV only B. II and IV C. I, II and IV D. I, III and IV 4. ABC Service Company sold a truck for cash with a loss of $10,000 recognized. The truck has a cost of $220,000 and accumulated depreciation of $140,000. The cash received in this sale must have been: A. $70,000. B. $60,000. C. $80,000. D. $90,000 5. An accountant of a company recorded the payment of rent for 5 months from 1 December 2019 to 30 April 2020 for $50,000 on 1 December 2019: Dr. Rent Expense $50,000 Cr. Cash $50,000 Suppose the accountant did not make any adjusting entries regarding rent at 31 December 2019, this will result in: A. no error in rent expense as the rent expense has been recorded. B. overstatement of net income for the year ended 31 December 2019. C. understatement of rent expense. D. understatement of asset. Use the following information to complete question 6-8. On 1 April 2020, Blueray Corporation issues $20,000,000 of 10%, 20-year bonds payable at 101. Interest on the bonds is payable semiannually each 1 April and 1 October. 6. The journal entry to record the issue of bond on 1 April 2020 will include: I. a debit to Cash of $20,000,000. II. a credit to Bonds Payable of $20,000,000. III. a debit to Discount on Bond Payable of $200,000. IV. a credit to Premium on Bond Payable of $200,000. A. I only B. II and IV C. I, II and III D. I, II and IV 7. The journal entry to record the first cash payment to bondholders on 1 October 2020, will include: A. a credit to Cash of $2,000,000. B. a debit to Premium on Bonds Payable of $5,000. C. a debit to Interest Expense of $1,000,000. D. a debit to Bond Payable of $1,000,000. 8. The adjusting entry required on 31 December 2020, related to this bond issue involves: A. recognition of Interest Expense of $500,000. B. recognition of Interest Expense of $497,500. C. a credit to Interest Payable of $497,500. D. a credit to Cash of $500,000. 9. Which of the following is not the main information provided by financial statements? A. Profitability B. Management Stewardship C. Cash flow D. Financial position 10. The principle/assumption that is violated when a company switches from FIFO Assumption to Average Cost Assumption in valuing inventory is: A. Monetary unit assumption. B. Conservatism principle. C. Consistency principle. D. Going concern assumption. Answer Question 11-12 with the following information. Presented below selected balances as at 31 December 2019 for a company which newly started in 2019. Credit Debit $31,500 $4,200 $10,500 Accounts receivable Prepaid rent Inventory Accounts payable Accrued expenses payable Sales Cost of goods sold Depreciation expenses Other operating expense $4,000 $5,450 $3,097,500 $1,627,500 $94,500 $273,000 11. Compute the amount of Cash receipts from customers during the current year. A. $3,097,500. B. $3,129,000. C. $3,066,000. D. $3,118,500. 12. The company's net cash from operating activities for the current year is: A. $1,191,750 B. $1,192,800. C. $1,113,000. D. $1,160,250