On August 1, Year 1, Gomez Company borrowed $68,000 cash. The one-year note carried a 25% rate of interest. Which of the following shows how the accrual of interest expense in Year 2 will affect Gomez’s financial statements? Balance SheetIncome StatementStatement of Cash Flows Assets = Liabilities +Stockholders’ Equity Revenues− Expenses = Net IncomeA. =9,919+(9,919) −9,919=(9,919)(9,919) OAB. =9,919+(9,919) −9,919=(9,919) C. =7,081+(7,081) −7,081=(7,081)(7,081) OAD. =7,081+(7,081) −7,081=(7,081)

Craig Company issued a discount note for cash. How does this event affect Craig’s financial statements? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityRevenue−Expense=Net Incomea.Increase= +IncreaseIncrease− =IncreaseIncrease OAb.Increase=Increase+Decrease −Increase=DecreaseIncrease FAc.Increase=Increase+ − = Increase FAd.Increase=Increase+ − = Increase OA

How is a customer’s NSF check reflected on a bank reconciliation?

Which of the following is the term commonly used to describe the practice of reporting the net realizable value of receivables in the financial statements?

On January 1, Year 1, Graham Corporation issued 310 shares of no-par common stock for $95 per share. Which of the following shows how the stock issue will affect Graham’s financial statements on January 1, Year 1?

On October 1, Allison Corporation declared a $85,000 cash dividend to be paid on December 15 to shareholders of record on November 1. Which of the following shows how Allison’s financial statements will be affected on October 1?

Which of the following statements about the materiality concept is not true?

Which of the following is not a significant difference between the allowance method and the direct write-off method?

On November 1, Year 1 Shelter Company loaned $4,000 cash to Cove Company. The one-year note carried a 5% rate of interest. Which of the following shows how the loan will affect Shelter’s financial statements on November 1, Year 1? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityCash+Net Receivable=Accounts Payable+Common Stock+Retained EarningsRevenue−Expense=Net IncomeA.(4,000)+4,000= + + − = (4,000) IAB.(4,000)+4,000= + + − = (4,000) OAC.4,000+ = 4,000+ + − = 4,000 IAD.(4,000)+ =(4,000)+ + − = (4,000) OA

Alberta Company accepts a credit card as payment for $450 of services provided for the customer. The credit card company charges a 4% fee for handling the transaction. Select the answer that shows how the entry to record the sale would affect Alberta’s financial statements. Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityRevenue−Expense=Net IncomeA.432= +432432− =432432 OAB.432= +432450−18=432432 OAC.432= +432450−18=432 D.450= +450450− =450