On January 1, Year 1, Carlyle Corporation issued a 5-year term note. The note requires an annual cash payment on December 31 of each year. The payment includes a principal repayment and interest. Indicate whether each of the following statements is true or false.________ a) The entry to record issuance of the note will increase assets and liabilities.________ b) The first payment on the note will reduce liabilities and assets, but will not affect equity.________ c) The second payment on the note will include higher interest expense than did the first payment.________ d) Each payment on the note includes a cash flow from operating activities and a cash flow from financing activities.________ e) The amount of the principal repayment will increase with each succeeding payment.
What will be an ideal response?
a) T b) F c) F d) T e) T
a) This is true. Issuing an installment note increases assets (cash) and liabilities (installment notes payable).
b) This is false. Each payment made decreases assets (cash), liabilities (installment notes payable), and equity (interest expense).
c) This is false. The second payment on the note will include less interest expense than did the first payment.
d) This is true. The portion of a payment that reduces principal is a cash flow for financing activities, and the portion that is interest is a cash flow for operating activities.
e) This is true. As interest expense goes down with each payment, the portion that reduces principal on the liability goes up.
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Which of the following statements is CORRECT?
A. Time lines cannot be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity. B. A time line is not meaningful unless all cash flows occur annually. C. Time lines are not useful for visualizing complex problems prior to doing actual calculations. D. Time lines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly. E. Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.
In a production cost report, the number of total units to account for consists of ________. The weighted-average method is used
A) units in process at the beginning of the period and units started or added during the period B) units in process at the end of the period and units started or added during the period C) units in process at the beginning of the period and units remaining at the end of the period D) units of completed and transferred out products and total units produced
LMN Insurance sells homeowners insurance. The LMN homeowners policy combines property and casualty insurance in the same contract. Insurance policies combining property and casualty coverage in the same contract are called
A) mono-line policies. B) multi-year policies. C) multiple-line policies. D) manuscript policies.
If you are driving negligently and run off the road and hit a person on the sidewalk, the rule of res ipsa loquitur is likely not to apply
a. True b. False Indicate whether the statement is true or false