General Investment Co. (GIC) purchased bonds on January 1, 2021. GIC's accountant has projected the following amortization schedule from purchase until maturity:DateCash ReceivedInterest RevenueAmortization of DiscountAmortized Cost 1/1/2021 $194,758 6/30/2021$7,000 $7,790 $790 195,548 12/31/2021 7,000 7,822 822 196,370 6/30/2022 7,000 7,855 855 197,225 12/31/2022 7,000 7,889 889 198,114 6/30/2023 7,000 7,925 925 199,039 12/31/2023 7,000 7,961 961 200,000 Recording the bond purchase would have what effect on the financial statements?
A. Increase assets and liabilities.
B. Increase liabilities.
C. Increase assets.
D. No effect on total assets and total liabilities.
Answer: D
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Holten Farm sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold. During the month of August, a salesperson, Fred, sold 3 new tractors. Jacob pays Jason on the 10th day of the month following the sale. Fred operates on the cash basis; the tractor dealer operates on the accrual basis. Which of the following statements is true?
a. Fred will recognize commission revenue earned in the amount of $3,000 in August. b. Jacob will recognize commission expense in the amount of $3,000 in August. c. Fred will recognize commission expense in the amount of $3,000 in September. d. Fred will recognize revenue in the same month that the tractor dealer recognizes expense.
Landers Company has 9 units in inventory on December 31. The units were purchased in November for $180 each. The price lists from suppliers indicate the current replacement cost of the item to be $178 each. What is the effect on gross profit if Landers values its ending merchandise inventory using the lower-of-cost-or-market rule?
A) The gross profit would increase by $2. B) The gross profit would not be affected. C) The gross profit would decrease by $18. D) The gross profit would increase by $18.
Which of the following related party transactions need to most carefully examined for fraud?
a. Transactions that generate operating income b. All transactions that appear anywhere within the company c. Absence of loans or other financing transactions between related entities d. Transactions that result in goodwill being recognized in the financial statements
Creditors are those who lend money to others or deliver goods and services before being paid
Indicate whether the statement is true or false