Question

6. Which of the following transactions would cause a change in the amount of a company's working capital? A) Collection of an account receivable B) Payment of an account payable C) Borrowing cash over a 60-day period D) Selling merchandise at a price above its cost 7. Del Rey Imports sold a depreciable plant asset for cash of $25,000. The accumulated depreciation amounted to $60,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been A) $55,000 B) $65,000 C) $80,000 D) $90,000 8. A company issued 5-year, 7% bonds with a par value of $100,000. The company received $97,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is A) $3,705.30. B) $3,294.70. C) $7,000.00 D) $7,410.60 9. Amortizing a bond discount A) decreases the Bonds Payable account. B) decreases interest expense each period. C) increases the market value of the Bonds Payable. D) allocates a part of the total discount to each interest period. 10. The debt ratio is used primarily as a measure of A) short-term liquidity. B) profitability. C) return on investment. D) creditors' long-term risk.