On May 1, 2012, Mink, Inc. borrowed 10,000 by issuing a 12, 3-month note and another 10,000 by issuing a 12, 6-month note. Interest expense for the month ended May 31, 2012 will be ________.
A) greater on the 3-month note than the 6-month note
B) greater on the 6-month note than the 3-month note
C) 200 for both notes combined
D) 0 for both notes because no interest was paid
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Q. 2) A check involves three parties. The person who orders the bank to pay a certain amount of money is called the
a. drawer.
b. drawee.
c. payee.
d. endorser.
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Q. 3) The statement of changes in shareholders' equity ________.
A) describes the financial situation of a company at a specific point in time
B) is a summary of all of the revenues minus all of the expenses for an accounting period
C) shows the changes that took place in the amount of shareholders' equity during a period
D) is a list of all the cash collected and cash paid during a period
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Q. 4) Cumberland Co sells 2,000 of inventory to Hancock Co for cash. Cumberland paid 1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry (ies) would be recorded?
a. debit Cash, 2,000; credit Merchandise Inventory, 1,250
b. debit Cash, 2,000; credit Sales, 2,000; and debit Cost of Merchandise Sold, 1,250; credit Merchandise Inventory, 1,250
c. debit Cash, 1,250; credit Sales, 1,250
d. debit Accounts Receivable, 2,000; credit Sales, 2,000; and debit Cost of Merchandise Sold, 1,250; credit Merchandise Inventory, 1,250
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Q. 5) Which of the following is NOT correct when preparing a bank reconciliation?
A) Outstanding checks are added to the balance per books.
B) Deposits in transit are added to the balance per bank statement.
C) Bank service charges are deducted from the balance per books.
D) NSF checks are deducted from the balance per books.
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Q. 6) The ERM framework addresses four categories of management objectives. Which category addresses the reliability of the financial statements?
a. compliance
b. operations
c. reporting
d. strategic
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