ACG 201

1.

The interest charged on a $200,000 note payable, at the rate of 6%, on a 90-day note would be

A)

$12,000.

B)

$6,000.

C)

$3,000. ($200,000*.06*90/360)

D)

$1,000.

2.

Unearned Rental Revenue is

A)

a contra account to Rental Revenue.

B)

a revenue account.

C)

reported as a current liability.

D)

debited when rent is received in advance.

3.

The current portion of long-term debt should

A)

be paid immediately.

B)

be reclassified as a current liability.

C)

be classified as a long-term liability.

D)

not be separated from the long-term portion of debt.

4.

A cash register tape shows cash sales of $2,000 and sales taxes of $160. The journal entry to record this information is

A)

B)

C)

D)

5.

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

A)

B)

C)

D)

6.

Bonds that may be exchanged for common stock at the option of the bondholders are called

A)

options.

B)

stock bonds.

C)

convertible bonds.

D)

callable bonds.

7.

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at:

A)

A premium.

B)

A discount.

C)

Par.

D)

Both a and b correct.

8.

A measure of a company's solvency is the

A)

acid-test ratio.

B)

current ratio.

C)

times interest earned ratio.

D)

asset turnover ratio.

9.

Secured bonds are bonds that

A)

are in the possession of a bank.

B)

can be converted into common stock.

C)

have specific assets of the issuer pledged as collateral.

D)

mature in installments.

10.

Liabilities are classified as current or long-term based on their

A)

description.

B)

payment terms.

C)

due date.

D)

amount.