29 Jun Question 7.7. The amount of principal
Question
1. On July 1, 2010, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 2010 is (Points : 5)
$1,800.
$1,050.
$900.
$600.
Question 2.2. A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit (Points : 5)
Equipment for $6,180, credit Interest Expense for $180, and credit Notes Payable for $6,000.
Equipment for $6,000 and credit Notes Payable for $6,000.
Equipment for $6,000, debit Interest Expense for $180, and credit Notes Payable for $6,180.
Equipment for $6,000 and credit Accounts Payable for $6,000.
Question 3. 3. Compute the maturity value of a 90-day, 10 percent note with a face value of $1,000. (Points : 5)
Question 4. 4. Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. Equipment purchased for $104,000 on January 3, 2011, has an estimated life of 5 years and an estimated salvage value of $9,000. The firm uses the straight-line method of depreciation. Determine the adjustment for the month ended January 31, 2011. (Points : 5)
Question 5.5. Allowance for Doubtful Accounts has a credit balance of $1,000 immediately before the write-off of a $300 account receivable. The credit balance of Allowance for Doubtful Accounts immediately after the write-off is (Points : 5)
$1,300.
$1,000.
$300.
$700.
Question 6.6. When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for the (Points : 5)
maturity value of the note.
face value less the interest that will accrue.
face value of the note plus the interest that will accrue.
face value of the note.
Question 7.7. The amount of principal and interest that must be paid when a note comes due is the (Points : 5)
Maturity Value
Face Value
Loan Value
Historic Value
Question 8.8. The four assumptions financial statement users should be able to assume that preparers of the statements have made in preparing the statements that are listed by the FASB’s conceptual framework are (Points : 5)
separate economic entity, going concern, monetary unit, and periodicity of income.
conservatism, matching principle, revenue recognition principle,
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