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MGMT 200: exam 3 Questions And Correct
Answers/ Latest Update / Already Graded
Woodcrest, Inc. borrowed $50,000 from a local bank and signed a
promissory note. What entry should Woodcrest record?
A. Debit Cash $50,000; Credit Notes Receivable $50,000
B. Debit Notes Receivable $50,000; Credit Cash $50,000
C. Debit Cash $50,000; Credit Notes Payable $50,000
D. Debit Notes Payable $50,000; Credit Cash $50,000
Ans: C
We record interest expense in the period in which we pay it, rather
than in the period we incur it
A. true
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B. false
Ans: B
Interest expense is recorded in the period incurred, not in the period
in which we pay it
On November 1, 2018, Knomarck, Inc. signed a $100,000, 6% six-
month note payable with the amount borrowed plus accrued
interest due six months later on May 1, 2019. Knomarck should report
interest payable at Dec. 31, 2018 in the amount of
A. $0
B. $1,000
C. $2,000
D. $3,000
Ans: B
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[(100,000)x6%)x2/12] = $1,000
On Nov. 1, 2018, Boiler Bakery signed a $200,000, 6% six-month
payable with the amount borrowed plus accrued interest due six
months later on May 1, 2019. Boiler Bakery records the appropriate
adjusting entry for the note on Dec. 31, 2018. What amount of cash
will be needed to pay back the note payable plus any accrued
interest on May 1, 2019?
A. $200,000
B. $202,000
C. $204,000
D. $206,000
Ans: D
200,000+[200,000x6%x6/12] = 206,000
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A contingency is best described as a(n)
A. current liability
B. probably liability
C. potential liability
D. estimated liability
Ans: C
If management can estimate the amount of loss that will occur due
to litigation against the company, and the likelihood of the loss is
reasonably possible, a contingent liability should be
A. Disclosed, but not reported as a liability
B. Disclosed and reported as a liability
C. Neither disclosed nor reported as a liability
D. Reported as a liability, but not disclosed
Ans: A
MGMT 200: exam 3 Questions And Correct
Answers/ Latest Update / Already Graded
Woodcrest, Inc. borrowed $50,000 from a local bank and signed a
promissory note. What entry should Woodcrest record?
A. Debit Cash $50,000; Credit Notes Receivable $50,000
B. Debit Notes Receivable $50,000; Credit Cash $50,000
C. Debit Cash $50,000; Credit Notes Payable $50,000
D. Debit Notes Payable $50,000; Credit Cash $50,000
Ans: C
We record interest expense in the period in which we pay it, rather
than in the period we incur it
A. true
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B. false
Ans: B
Interest expense is recorded in the period incurred, not in the period
in which we pay it
On November 1, 2018, Knomarck, Inc. signed a $100,000, 6% six-
month note payable with the amount borrowed plus accrued
interest due six months later on May 1, 2019. Knomarck should report
interest payable at Dec. 31, 2018 in the amount of
A. $0
B. $1,000
C. $2,000
D. $3,000
Ans: B
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[(100,000)x6%)x2/12] = $1,000
On Nov. 1, 2018, Boiler Bakery signed a $200,000, 6% six-month
payable with the amount borrowed plus accrued interest due six
months later on May 1, 2019. Boiler Bakery records the appropriate
adjusting entry for the note on Dec. 31, 2018. What amount of cash
will be needed to pay back the note payable plus any accrued
interest on May 1, 2019?
A. $200,000
B. $202,000
C. $204,000
D. $206,000
Ans: D
200,000+[200,000x6%x6/12] = 206,000
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A contingency is best described as a(n)
A. current liability
B. probably liability
C. potential liability
D. estimated liability
Ans: C
If management can estimate the amount of loss that will occur due
to litigation against the company, and the likelihood of the loss is
reasonably possible, a contingent liability should be
A. Disclosed, but not reported as a liability
B. Disclosed and reported as a liability
C. Neither disclosed nor reported as a liability
D. Reported as a liability, but not disclosed
Ans: A
