1. Which of the following is a claims exchange transaction? .Paid interest on Is

Question

1. Which of the following is a claims exchange transaction? .Paid interest on Issued a note to Repaid principal d. Accrued on a note payable. ?. a note payable purchase equipment. on a note payable. 1 points QUESTION 16 When do the effects of product warranties appear on the statement of cash flow? 1. C C d. None of b, c. when When the warranty obligation is recognized ? a. When there is a settlement ( these. of a warranty claim made by a customer. merchandise is made 1 points QUESTION 17 Which of the following items is not classified as a current asset? 1. b. Office Equipment. d. Prepaid Rent. a, Acco u n ts Receivabler Merchandise Inventorv. C. om

Explanation / Answer

Answer 15

d) Accured interest on note payable

Explanation : Claim exchange transaction results in decrease in one claim & increase of another claim , however the impact of total claim remains same. When accrued interest is recorded , it increases the liabilities (current) & interest expense is recorded in income statement which decreases the retained earning.

Answer 16

a). When there is settlement of warrenty claim made by customers .

Explanation : Any transaction impacts the cash flow statement when there is inflow or outflow of cash involved. Settlement of warrenty claim involves transfer of cash thus its appears in statement of cash flow.

Answer 17

c.) Office Equipment.

Explanation : Office equipments are classified as fixed assets.

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