Question 1

To compute the interest for notes payable,multiply principal times the annual rate of interest.

Accepted Answer

The formula is principal × interest rate × time.

Question 2

Cash received in advance of providing goods or performing services is recorded as ________.
A)Unearned Revenue
B)Accrued Revenue
C)Service Revenue
D)Uncollected Revenue

Accepted Answer

Cash received in advance of providing goods or performing services is recorded as Unearned Revenue, which is a liability account that represents the obligation to provide goods or perform services in the future.

Question 3

Short-term notes payable represent a written promise by the business to pay a debt,without the addition of interest,within one year or less.

Accepted Answer

Short-term notes payable often include interest, which the business agrees to pay in addition to the principal amount within one year or less.

Question 4

Jupiter Services sells service plans for commercial computer maintenance.The price for each service plan is $1,650 per year,paid in advance.On October 1,2018,a service plan was sold to a new customer for cash.Prepare the journal entry to record this transaction.Omit explanation.

Accepted Answer

The answer of Jupiter Services sells service plans for commercial...

Question 5

The journal entry for accrued interest on a note payable includes ________.
A)a debit to Interest Expense and credit to Cash
B)a debit to Interest Expense and credit to Interest Payable
C)a debit to Interest Payable and credit to Cash
D)a credit to Interest Expense and debit to Notes Payable

Accepted Answer

The journal entry for accrued interest on a note payable involves recording the interest expense as a debit and the corresponding liability in the form of interest payable as a credit. Therefore, the correct choice is B, a debit to Interest Expense and credit to Interest Payable.

Question 6

A $49,000,three-month,12% note payable was issued on December 1,2018.What is the amount of accrued interest on December 31,2018? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )
A)$490
B)$708
C)$354
D)$823

Accepted Answer

11ea8a75_4322_c4bf_a2a1_b32690b1e005_TB6701_00

Question 7

When a business records accrued interest expense on a note payable ________.
A)Interest Expense is credited
B)Note Payable is credited
C)Cash is debited
D)Interest Payable is credited

Accepted Answer

Accrued interest is interest that has been earned but has not yet been paid or received. Therefore, when a business records accrued interest expense on a note payable, it should credit Interest Payable account. This is because the business owes this interest to the lender but has not yet paid it. The corresponding debit entry would be to Interest Expense account.

Question 8

Fleetwood Company signed a three-year note payable for $59,000 at 7% annual interest.What is the interest expense for 2019 if the note was signed on August 1,2019? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )
A)$2065
B)$1721
C)$12,390
D)$4130

Accepted Answer

11ea8a75_4323_d633_a2a1_bbff4f6ba678_TB6701_00

Question 9

Management Services sells service plans for commercial computer maintenance.The price for each plan is $1,350 per year,paid in advance.On October 1,2019,a service plan was sold to a new customer for cash,and the plan covers the period October 1,2019 to September 30,2020.Prepare the December 31,2019 adjusting entry.Round to two decimal places.Omit explanation.

Accepted Answer

The answer of Management Services sells service plans for commercial...

Question 10

When borrowing cash from a bank,the business is required to sign a promissory note stating that the business will pay the principal plus interest at a specified maturity date.

Accepted Answer

This is a standard procedure for borrowing money from a bank.

Question 11

Which of the following liabilities is created when a company receives cash for services to be provided in the future?
A)Unearned Revenue
B)Accrued Liability
C)Accounts Payable
D)Estimated Warranty Payable

Accepted Answer

Unearned Revenue is created when a company receives cash from a customer for services that have not yet been provided. It represents a liability because the company has an obligation to provide the services in the future, and the revenue cannot be recognized until the services are performed. Accrued Liability is a liability that arises when an expense has been incurred but has not yet been paid or recorded. Accounts Payable is a liability that arises when a company owes money to its suppliers for goods or services that have already been received. Estimated Warranty Payable is a liability that arises as a result of the estimated cost of fulfilling the company's warranty obligations on its products.

Question 12

A $54,000,four-month,12% note payable was issued on October 1,2018.Which of the following would be included in the journal entry required on the note's maturity date by the borrower? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )
A)a credit to Note payable for $56,160
B)a credit to Cash for $54,000
C)a debit to Interest expense for $540
D)a debit to Interest payable for $540

Accepted Answer

11ea8a75_4323_39f1_a2a1_d12080fe3a24_TB6701_00

Question 13

Which of the following correctly describes the accounting treatment for interest payable?
A)It is shown on the balance sheet as a current liability.
B)It is shown on the income statement as an operating expense.
C)It is shown on the balance sheet as a current asset.
D)It is shown on the balance sheet as a long-term liability.

Accepted Answer

Interest payable represents the amount of interest that has been incurred but not yet paid. It is a current liability and is reported on the balance sheet as such. Option B is incorrect because interest payable is not an operating expense but rather a financing cost. Option C is incorrect because interest payable does not represent money that the company is owed but rather a debt that the company owes. Option D is incorrect because interest payable is a short-term debt and is thus reported as a current liability.

Question 14

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar. )
A)$935
B)$156
C)$468
D)$312

Accepted Answer

11ea8a75_4323_8812_a2a1_7b81fc9891fb_TB6701_00

Question 15

On April 1,2019,Orbit Services received $8000 in advance of performing the services from a customer for three months of service - April,May and June.What would be the journal entry to adjust the accounts at the end of May? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )
A)Debit Service Revenue $2667,and credit Unearned Revenue $2667.
B)Debit Unearned Revenue $5333,and credit Service Revenue $5333.
C)Debit Unearned Revenue $8000,and credit Service Revenue $8000.
D)Debit Service Revenue $5333,and credit Accounts Receivable $5333.

Accepted Answer

11ea8a75_4321_652b_a2a1_f11ac5da017c_TB6701_00

Question 16

Which of the following accounts will be credited by the borrower when a promissory note is issued?
A)Note Payable
B)Note Receivable
C)Interest Payable
D)Cash

Accepted Answer

When a borrower issues a promissory note, it increases their liability because they are promising to pay back the amount borrowed. Therefore, the Note Payable account, which represents this liability, is credited.

Question 17

A $45,000,two-month,9% note payable was issued on December 1,2018.What is the amount of interest expense recorded in the year 2019? (Round the final calculation to the nearest dollar. )
A)$4050
B)$338
C)$675
D)$45,675

Accepted Answer

11ea8a75_4322_ebd0_a2a1_554be611bd8a_TB6701_00

Question 18

On August 31,2018,Allright Services received $3,500 in advance of performing the service.Which journal entry is needed to record the receipt of cash?
A)Debit Unearned Revenue $3,500,and credit Cash $3,500.
B)Debit Cash $3,500,and credit Service Revenue $3,500.
C)Debit Unearned Revenue $3,500,and credit Service Revenue $3,500.
D)Debit Cash $3,500,and credit Unearned Revenue $3,500.

Accepted Answer

When cash is received in advance of performing a service, it is recorded as a liability because the service has not yet been provided. Therefore, Cash should be debited to increase the asset account, and Unearned Revenue should be credited to record the liability. This reflects the company's obligation to either perform the service or return the cash.

Question 19

Solutions Services sells service plans for commercial computer maintenance.The price for each plan is $1,350 per year,paid in advance.On October 1,2018,a service plan was sold to a new customer for cash,and the plan covers the period October 1,2018 to September 30,2019.Adjusting entries are made on December 31 of each year.Prepare the journal entry for September 30,2019.Round to two decimal places.Omit explanation.

Accepted Answer

The answer of Solutions Services sells service plans for commercial...

Question 20

Unearned revenue,for services to be performed in six months,appears on the balance sheet as ________.
A)long-term investments
B)current liabilities
C)current assets
D)long-term assets

Accepted Answer

Unearned revenue is a liability because it represents an obligation to provide services or goods in the future. In this case, since the services are to be performed in six months, it is considered a current liability.

Quiz 11: Current Liabilities and Payroll

To compute the interest for notes payable,multiply principal times the annual rate of interest.

Cash received in advance of providing goods or performing services is recorded as ________.

Short-term notes payable represent a written promise by the business to pay a debt,without the addition of interest,within one year or less.

Jupiter Services sells service plans for commercial computer maintenance.The price for each service plan is $1,650 per year,paid in advance.On October 1,2018,a service plan was sold to a new customer for cash.Prepare the journal entry to record this transaction.Omit explanation.

The journal entry for accrued interest on a note payable includes ________.

A $49,000,three-month,12% note payable was issued on December 1,2018.What is the amount of accrued interest on December 31,2018? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

When a business records accrued interest expense on a note payable ________.

Fleetwood Company signed a three-year note payable for $59,000 at 7% annual interest.What is the interest expense for 2019 if the note was signed on August 1,2019? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

When borrowing cash from a bank,the business is required to sign a promissory note stating that the business will pay the principal plus interest at a specified maturity date.

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

A $54,000,four-month,12% note payable was issued on October 1,2018.Which of the following would be included in the journal entry required on the note's maturity date by the borrower? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Which of the following correctly describes the accounting treatment for interest payable?

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Which of the following accounts will be credited by the borrower when a promissory note is issued?

A $45,000,two-month,9% note payable was issued on December 1,2018.What is the amount of interest expense recorded in the year 2019? (Round the final calculation to the nearest dollar. )

On August 31,2018,Allright Services received $3,500 in advance of performing the service.Which journal entry is needed to record the receipt of cash?

Unearned revenue,for services to be performed in six months,appears on the balance sheet as ________.