Reference no: EM132620055

Question 1: Which of the following is characteristic of liabilities rather than of equity? (More than one answer may be correct.)

a. The obligation matures.

b. Interest paid to the provider of the capital is deductible in the determination of taxable income.

c. The capital providers' claims are residual in the event of liquidation of the business.

d. The capital providers normally have the right to exercise control over business operations.

Question 2: On October 1, Dalton Corp. borrows $100,000 from National Bank, signing a six-month note payable for that amount, plus interest to be computed at a rate of 9 percent per annum. Indicate all correct answers.

a. Dalton's liability at October 1 is only $100,000.

b. The maturity value of this note is $104,500.

c. At December 31, Dalton will have a liability for accrued interest payable in the amount of $4,500.

d. Dalton's total liability for this loan at November 30 is $101,500.