Accounting 2000 Chapter 10 Start for Exam3

c. current liability.

Any balance in an unearned revenue account is reported as a(n) a. revenue. b. long-term debt. c. current liability. d. unearned liability.

a. increased; the Interest Payable account is increased.

As interest is recorded on an interest-bearing note, the Interest Expense account is a. increased; the Interest Payable account is increased. b. increased; the Notes Payable account is decreased. c. increased; the Notes Payable account is increased. d. decreased; the Interest Payable account is increased.

c. interest on the unpaid balance of the loan and reduction of loan principal.

Each payment on a mortgage note payable consists of a. interest on the original balance of the loan only. b. interest on the original balance of the loan and reduction of loan principal. c. interest on the unpaid balance of the loan and reduction of loan principal. d. reduction of loan principal only.

a. assets exceed current liabilities.

From a liquidity standpoint, it is more desirable for a company to have current a. assets exceed current liabilities. b. liabilities exceed current assets. c. assets equal current liabilities. d. liabilities exceed long-term liabilities.

a. added to Bonds Payable.

In the balance sheet the account Premium on Bonds Payable is a. added to Bonds Payable. b. deducted from Bonds Payable. c. classified as a revenue account. d. classified as a stockholders' equity account.

a. long-term.

Liabilities are classified on the balance sheet as current or a. long-term. b. accrued. c. unearned. d. deferred.

b. $12,000.

Reliable Insurance Company collected a premium of $36,000 for a 1-year insurance policy on May 1. What amount should Reliable report as a current liability for Unearned Insurance Revene at December 31? a. $24,000. b. $12,000. c. $36,000. d. $0.

a. current liabilities.

Sales taxes collected by a retailer are reported as a. current liabilities. b. revenues. c. contingent liabilities. d. expenses.

b. useful in evaluating a company's liquidity.

The relationship between current liabilities and current assets is a. useful in determining the amount of a company's long-term debt. b. useful in evaluating a company's liquidity. c. useful in determining income. d. called the matching principle.

b. equal to the note's face value.

With an interest-bearing note, the amount of assets received upon issuance of the note is generally a. equal to the note's maturity value. b. equal to the note's face value. c. less than the note's face value. d. greater than the note's face value.