Chapter 10 Quiz

The entry to record the proceeds upon issuing an interest-bearing note is

-Cash - Notes Payable

Unearned Revenue is reported as a

Current Liability

The entry to record the issuance of an interest-bearing note credits Notes Payable for the notes

Face Value

The higher the sales tax rate, the more profit a retailer can earn T or F

False

Admire County Bank agrees to lend Givens Brick Company $600,00 on January 1. Givens Brick Company signs a $600,00, 8%, 9-month note. What is the adjusting Entry required if Givens Brick Company prepares financial statements on June 30?

Interest Expense 24,000 Interest Payable 24,000

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount T or F

True

Metropolitan Symphony sells 200 season tickets for $50,000 that represents a five concert season. The amount of unearned ticket revenue after the second concert is $20,000 T or F

True

Notes payable usually require the borrower to pay interest T or F

True

A company whose current liabilities exceed its current assets may have a liquidity problem T or F

true