Indicate whether each of the following is true or false. Perez Company borrowed money from its bank in July Year 1. The accrual of interest on the loan at the end of Year 1:________ a) reduces cash flows.________ b) involves recognition of interest expense.________ c) does not affect income for Year 1.________ d) involves recognition of a liability.________ e) records a cash payment for interest.
What will be an ideal response?
a) F b) T c) F d) T e) F
a) This is false. Adjusting entries for accruals never involve cash.
b) This is true. The adjusting entry increases interest expense.
c) This is false. Recognition of interest expense decreases net income in Year 1.
d) This is true. The adjusting entry increases interest payable, a liability.
e) This is false. The entry recognizes expense, but payment of interest on the loan occurs when the loan is due in the following year.
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After the temporary owner's equity and drawing accounts are transferred to the permanent owner's equity account, which of the following accounts will have a balance?
a. Expenses b. Revenues c. Owner's Capital d. Income Summary
If A and B are independent events with P(A) = 0.5 and P(A ? B) = 0.12, then, P(B) =
A. 0.240. B. 0.060. C. 0.380. D. 0.620.
The more ______ guests are with the organization, the more qualified they are to provide technical feedback.
a. unfamiliar b. familiar c. loyal d. dissatisfied
Which statement regarding international law is incorrect?
a. The International Court of Justice, or World Court, is a body of the United Nations. b. Institutions interested in uniform world laws include the International Chamber of Commerce, The Hague Convention, and the Vienna Agreement. c. Unified laws have produced unified judicial practices. d. The EU and NAFTA are agreements that are trying to equalize the treatment of organizations doing business multinationally.