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Intermediate Accounting McGraw Hill Connect Chapter 3 Quiz

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Intermediate Accounting McGraw Hill Connect Chapter 3 Quiz
1. An item not generally classified as a current asset is a:
a. Patent
b. Trade receivables
c. Prepaid rent
d. Inventories
2. An item not generally classified as a current liability is:
a. Revenue received in advance
b. Accrued interest payable
c. Accounts payable
d. Bonds payable
3. Which of the following is true regarding a company assuming more debt?
a. Assuming more debt is always bad for the company.
b. Assuming more debt is always good for the company.
c. Assuming more debt can be good for the company as long as it earns a return
in excess of the rate changed on the borrowed funds.
d. Assuming more debt reduces leverage.
4. Which of the following items represents cash received from customers for goods or
services to be provided in a future period?
a. Accounts receivable
b. Current maturities of long-term debt
c. Deferred revenues
d. Accounts payable
5. A company purchases a building for $900,000 by obtaining a 30-year mortgage payable.
Assume the lending arrangement specifies that the company will pay $20,000 of the
principal over the first year, $30,000 in the second year, and the remainder evenly over
the final 28 years. What amount of the $900,000 would be classified as a long-term
liability at the time the mortgage payable is obtained?
a. $900,000
b. $880,000
c. $850,000
d. $0
6. The ending balance of retained earnings can best be described as:
a. The amount of cash received from stockholders over the life of the company.
b. The amount of net income over the life of the company not paid to owners in
the form of dividends.
c. The amount of dividends paid over the life of the company.
d. The amount of net income over the life of the company.
7. The basis used to classify assets as current or long-term is:
a. Whether an asset is monetary or non-monetary.
b. The operating cycle or one year, whichever is shorter.
c. Usually one year, because the operating cycle typically is less than one year.
(The determination of current versus non-current assets is based on whether
the asset is expected to be converted to cash or consumed within the coming

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Intermediate Accounting McGraw Hill Connect Chapter 3 Quiz 1. An item not generally classified as a current asset is a: a. Patent b. Trade receivables c. Prepaid rent d. Inventories 2. An item not generally classified as a current liability is: a. Revenue received in advance b. Accrued interest payable c. Accounts payable d. Bonds payable 3. Which of the following is true regarding a company assuming more debt? a. Assuming more debt is always bad for the company. b. Assuming more debt is always good for the company. c. Assuming more debt can be good for the company as long as it earns a return ...
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