Question Details

Which of the following is true about accounts 



1.	Liabilities are
a.	any accounts having credit balances after closing entries are made.
b.	deferred credits that are recognized and measured in conformity with generally accepted accounting principles.
c.	obligations to transfer ownership shares to other entities in the future.
d.	obligations arising from past transactions and payable in assets or services in the future.

	2.	Which of the following is a current liability?
a.	A long-term debt maturing currently, which is to be paid with cash in a sinking fund
b.	A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue
c.	A long-term debt maturing currently, which is to be converted into common stock
d.	None of these answers are correct.

	3.	Which of the following is true about accounts payable?
1.	Accounts payable are also called trade accounts payable.
2.	When accounts payable are recorded at the net amount, a Purchase Discounts account will be used.
3.	When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used.
a.	1
b.	2
c.	3
d.	Both 2 and 3 are true.

	4.	Among the short-term obligations of Larsen Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Dennison National Bank.  These are 90-day notes, renewable for another 90-day period.  These notes should be classified on the balance sheet of Larsen Company as
a.	current liabilities.
b.	deferred charges.
c.	long-term liabilities.
d.	intermediate debt.

	5.	Which of the following is not true about the discount on short-term notes payable?
a.	The Discount on Notes Payable account has a debit balance.
b.	The Discount on Notes Payable account should be reported as an asset on the balance sheet.
c.	When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate.
d.	Discount on Notes Payable is a contra account to Notes Payable.




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