Question

A current liability is a debt that can reasonably be expected to be paid a within...

A current liability is a debt that can reasonably be expected to be paid

a within one year or the operating cycle, whichever is longer.

b between 6 months and 18 months.

c out of currently recognized revenues.

d out of cash currently on hand.

Assume a 360-day year for calculating interest. The interest charged on a $200,000 note payable, at the rate of 8%, on a 90-day note would be

a. $16,000.

b $8,888.

c $4,000.

d $1,333.

On September 1, Joe's Painting Service borrows $100,000 from National Bank on a 4-month, $100,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?

a Interest Payable ......................................................................      2,000

                               Interest Expense ............................................................                              2,000

b Interest Expense .....................................................................      6,000

                               Interest Payable .............................................................                              6,000

c Interest Expense .....................................................................      2,000

                               Interest Payable .............................................................                              2,000

d Interest Expense .....................................................................      2,000

                               Notes Payable................................................................                              2,000

Crawford Company has total proceeds (before segregation of sales taxes) from sales of $4,770. If the sales tax is 6%, the amount to be credited to the account Sales Revenue is:

a. $4,770.

b $4,484.

c $5,056.

d $4,500.

Sales taxes collected by the retailer are recorded as a(n)

a revenue.

b liability.

c expense.

d asset.

Business   Accounting   
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Homework Answers

Answer #1
Answer) option a
within one year or the operating cycle ,whichever is
longer
answer) option c ----$4,000
200,000*8%*90/360
4000
Answer) option c
100,000*6%*4/12
2000
interest expense 2,000
interest payable 2,000
answer) option d $4,500
4770/1.06
4500
answer) option b
liability
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