FIN 534 Quiz 2 (15 questions with answers) 99,99 % Scored PLEASE DOWNLOAD HEREQuestion 1All of the following are reported as current liabilities exceptunearned revenues.accounts payable.notes payable.bonds payable.Question 2The relationship between current liabilities and current assets isuseful in evaluating a companys liquidity.useful in determining income.called the matching principle.useful in determining the amount of a companys long-term debt.Question 3Most companies pay current liabilitiesby creating long-term liabilities.out of current assets.by issuing interest-bearing notes payable.by issuing stock.Question 4From a liquidity standpoint, it is more desirable for a company to have current
assets exceed current liabilities.assets equal current liabilities.liabilities exceed long-term liabilities.liabilities exceed current assets.Question 5In most companies, current liabilities are paid withinone year out of current assets.one year through the creation of other current liabilities.the operating cycle through the creation of other current liabilities.the operating cycle out of current assets.Question 6The entry to record the issuance of an interest-bearing note credits NotesPayable for the notesface value.maturity value.cash realizable value.market value.Question 7As interest is recorded on an interest-bearing note, the Interest Expense accountisincreased; the Notes Payable account is increased.increased; the Interest Payable account is increased.increased; the Notes Payable account is decreased.decreased; the Interest Payable account is increased.Question 8Unearned Rental Revenue is
reported as a current liability.debited when rent is received in advance.a revenue account.a contra account to Rental Revenue.Question 9The amount of sales tax collected by a retail store when making sales isa miscellaneous revenue for the store.a current liability.not recorded because it is a tax paid by the customer.recorded as an operating expenseQuestion 10Bonds that are secured by real estate are termedbearer bonds.mortgage bonds.serial bonds.debenturesQuestion 11A major disadvantage resulting from the use of bonds is thattaxes may increase.interest must be paid on a periodic basis.earnings per share may be lowered.bondholders have voting rights.Question 12Which one of the following amounts increases each period when accounting forlong-term notes payable?
Cash paymentPrincipal balanceReduction of principalInterest expenseQuestion 13The entry to record an installment payment on a long-term note payable isMortgage Notes PayableInterest ExpenseCashMortgage Notes PayableCashBonds PayableCashInterest ExpenseCashQuestion 14Each of the following may be shown in a supporting schedule instead of thebalance sheet except thecurrent maturities of long-term debt.interest rates.conversion privileges.maturity dates.Question 15The discount on bonds payable or premium on bonds payable is shown on thebalance sheet as an adjustment to bonds payable to arrive at the carrying valueof the bonds. Indicate the appropriate addition or subtraction to bonds payable: