A company’s ability to issue unsecured debt depends on its credit standing.

An asset’s book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

A company cannot have a liability if the amount of the obligation is unknown.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $4,000 salvage value. The machine’s book value at the end of year 2 is:

Periodic interest payments on bonds are determined by multiplying the par value of the bond by the contract rate.

An accelerated depreciation method yields larger depreciation expense in the early years of an asset’s life and less depreciation expense in later years.

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method?