Reference no: EM132322448
1) When a company with a current ratio of 1.2 pays a current liability:
A) Its current ratio remains unchanged.
C) Its debt to equity ratio increases.
B) Its current ratio increases.
D) Its current ratio decreases.
2) ABC buys widgets for $5 cash and sells them on account for $8. At the point of sale, what is the effect on the cash flow of ABC?
A) Increase $8
B) No effect
C) Decrease $5
D) Increase $3
3) On November 1, 2018, ABC signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2019. ABC should report interest payable at December 31, 2018, in the amount of:
A) $0.
B) $1,000.
C) $2,000.
D) $3,000.
4) When we pay Sales tax we CR Cash and Debit
A) A Liability
B) An Asset
C) Revenue
D) An Expense
5) ABC buys widgets for $5 cash and sells them on account for $8. If ABC owns a widget, from a cash flow perspective the widget is valued at?
A) $8
B) $3
C) SO
D) $5
6) In an Operating Lease the Lessee records an Asset and a Liability
A) True
B) False
7) ABC sold inventory for $1,200 that was purchased for $700. ABC records which of the following when it sells inventory using a periodic inventory system?
A) Debit Cost of Goods Sold $700; credit Inventory $700.
B) No entry is required for cost of goods sold and inventory.
C) Debit Cost of Goods Sold $1,200; credit Inventory $1,200.
D) Debit Inventory $700; credit Cost of Goods Sold $700.