71. The current ratio is computed as follows:
A. Current assets divided by total assets.
B. Current assets minus current liabilities.
C. Current assets divided by current liabilities.
D. Retained earnings divided by current liabilities.
72. The term used to describe the ability to generate short-term cash flows is:
A. Profitability
B. Solvency
C. Stockholder's Equity
D. Liquidity
73. Hartford Company borrowed $20,000 on October 1, 2016. Hartford issued a one year 6% discount note payable. The adjusting entry necessary to record accrued interest on December 31, 2016 would include a:
A. debit to Discount on Notes Payable of $300.
B. debit to Interest Expense for $300.
C. credit to Interest Payable for $300.
D. none of these answer choices are correct.
74. The amount of interest expense appearing on the 2016 income statement would be:
A. $1,200.
B. $3,600.
C. $2,400.
D. $7,200.
75. As a result of the recognition of interest expense on December 31, 2016,
A. liabilities will increase and retained earnings will decrease.
B. assets and liabilities will decrease.
C. assets will increase and retained earnings will increase.
D. liabilities will increase and assets will decrease.
76. The carrying value of the liability appearing on the December 31, 2016 balance sheet will amount to:
A. $80,400
B. $87,600
C. $90,000
D. $88,800
77. How would the adjusting entry to record interest expense on December 31, 2016 affect the financial statements?
78. After accruing all interest expense due as of April 1, 2016, Baltimore Company made the cash payment for the full amount due (i.e., principal and interest) to Bank of the Chesapeake. Select the answer that shows how the cash payment will affect Baltimore’s financial statements.
79. The amortization of the discount on a note payable has what effect on a company's financial statements?
A. Decreases interest expense and decreases liabilities.
B. Decreases interest expense and increases liabilities.
C. Increases interest expense and decreases liabilities.
D. Increases interest expense and increases liabilities.
80. Choose the correct answer to complete the following: Discount notes....
A. are recorded in the account "notes payable" at more than face value on the day of issue.
B. are recorded in the account "notes payable" at face value on the day of issue.
C. are recorded in the account "notes payable" at less than face value on the day of issue.
D. are not recorded until the maturity date.