Chapter

When a company repays the face value of a bond liability that was issued at face value, ______ decreases.

cash bonds payable cash flow from investing activities

When a company makes a cash payment for interest on a bond that was issued at face value, ______ decreases.

cash flow from operating activities cash retained earnings

Warranties normally ______.

cover a specific time period are based on estimates guarantee repair or replacement

Recognizing accrued interest expense ______.

is a claims exchange transaction decreases net income

When a company increases the amount borrowed on a line of credit, net income ______ and net cash flow from ______ activities increases.

is not affected, financing

A business has a debt that is due in May, Year 2. At December 31, Year 1 the company does not plan to use any of its current assets to repay this debt. This debt should be classified as ______ on the December 31, Year 1 balance sheet.

long-term

The cash outflow for interest payments on bonds is reported in the Blank 1Blank 1 financing , Incorrect Unavailable activities section of the statement of cash flows

operating

Simms Accountants charged a client $2,000 cash plus tax for services provided in a state where the service sales tax rate is 6%. As a result of this event, the ______.

sales tax liability account increases by $120 cash account increases by $2,120

Paying a warranty claim affects the ______.

statement of cash flows balance sheet

Borrowing funds through a line of credit is a(n) ______ transaction.

asset source

Repaying funds through a line of credit is a(n) ______ transaction.

asset use

Current liabilities include ______.

10 years bonds due in 5 months accounts payable wages payable

A payment on an installment loan ______.

affects the balance sheet. affects the income statement.

When a bond is issued at face value, the cash interest payment ______ interest expense.

equals

When a company sells merchandise with a warranty, ______.

financial statement users must be informed of the obligation

The cash outflow for repaying the face value of a bond liability is reported in the _______________ activities section of the statement of cash flows.

financing