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| 1.
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When a 2-month, 12%, note payable is issued on March 15, no adjusting entry is required at the end of March or April if the accounting period ends June 30. |
| | A) | True |
| | B) | False |
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| 2.
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The proceeds (amount received) from an interest-bearing note payable will be equal to the principal or the face value of the note. |
| | A) | True |
| | B) | False |
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| 3.
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A product warranty is an example of a definite liability. |
| | A) | True |
| | B) | False |
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| 4.
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The lessor is the party who is providing the asset for the lessee to use. |
| | A) | True |
| | B) | False |
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| 5.
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The bank discount on a $4,000, 90-day, non-interest-bearing note discounted at 10% is $100. |
| | A) | True |
| | B) | False |
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| 6.
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A product warranty is an example of a contingent liability. |
| | A) | True |
| | B) | False |
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| 7.
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In a loan transaction, the bank or lender collects the interest when the loan is repaid. |
| | A) | True |
| | B) | False |
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| 8.
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Fixed costs such as interest expense can be advantageous when sales are declining. |
| | A) | True |
| | B) | False |
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| 9.
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The times fixed interest charges earned ratio has increased from 4.5 to 7.5. This is a favourable change in this ratio. |
| | A) | True |
| | B) | False |
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| 10.
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On December 31, the accrued interest for a $10,000, 12%, 2-month note payable dated December 16 will total $200. |
| | A) | True |
| | B) | False |
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| 11.
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The accrued interest on December 31 for a $10,000, 12%, 2-month note payable dated December 1 totals $100. The interest expense recorded on January 30, when the note is paid in full, will total $100. |
| | A) | True |
| | B) | False |
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| 12.
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The goods and service tax (GST) rate varies from province to province. |
| | A) | True |
| | B) | False |
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| 13.
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Input tax credits (ITC's) are added to the GST collected by a company to determine the amount of GST owed to the federal government. |
| | A) | True |
| | B) | False |
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| 14.
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On the balance sheet the current portion of the long-term debt is listed as an asset. |
| | A) | True |
| | B) | False |
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| 15.
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The unlikely contingent gains should be disclosed in the notes to the financial statement. |
| | A) | True |
| | B) | False |
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| 16.
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The likely contingent gains should be recorded in the books. |
| | A) | True |
| | B) | False |
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| 17.
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The contingent liabilities that are not currently determinable are not required to be disclosed in the notes to the financial statements. |
| | A) | True |
| | B) | False |
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| 18.
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The likely contingent liabilities whose amount can be reasonably estimated should be reported on the balance sheet. |
| | A) | True |
| | B) | False |
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| 19.
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The matching principle requires that the warranty expense should be recorded in the same period as when the sale occurs. |
| | A) | True |
| | B) | False |
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