A laptop computer is a personal computer that fits on a desk but is too large to carry easily from place to
place.
Indicate whether the statement is true or false
F
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On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using the effective interest method of amortization is:
A. Debit Interest Expense $15,351.72; credit Discount on Bonds Payable $1,351.72; credit Cash $14,000.00. B. Debit Interest Expense $15,351.72; credit Premium on Bonds Payable $1,351.72; credit Cash $14,000.00. C. Debit Interest Payable $14,000.00; credit Cash $14,000.00. D. Debit Interest Expense $12,648.28; debit Premium on Bonds Payable $1,351.72; credit Cash $14,000.00. E. Debit Interest Expense $12,648.28; debit Discount on Bonds Payable $1,351.72; credit Cash $14,000.00.
Answer the following statements true (T) or false (F)
1) A company discovers that its cost of goods sold is understated by an insignificant amount. It does not need to correct the error because of the conservatism principle. 2) The accounting principles followed for a $5,000 cost in a small company must be the same as the accounting principles followed for a $5,000 cost in a large company. 3) Properly recording inventory when sold and removing the units sold from the inventory count will prevent a company from running out of inventory. 4) Maintaining good controls over merchandise inventory ensures that inventory purchases and sales are properly authorized and accounted for by the accounting system. 5) Ending inventory is calculated by multiplying the number of units on hand by the unit cost.
Period costs are
A) charged against the revenue of the current period. B) initially recognized on the balance sheet as inventory. C) charged to the period in which the product generates revenue. D) further classified as direct costs and indirect costs.
When amounts of a transactions are entered in an account on the right hand side, they are said to be
A) credited B) debited C) added D) subtracted