1. Discount on Notes Payable is treated as a reduction of notes payable on the balance sheet.

a. True b. False

2. A contingent liability is recorded if it is probable but cannot be reasonably estimated.

a. True b. False

3. An annuity is a series of equal payments made at equal intervals in the future.

a) True b) False

4. A note payable due in two years is a current liability.

a. True b. False

5. All liabilities that are not classified as current liabilities are classified as long-term.

a. True b. False

6. The most obvious risk to bond investors is that a company will fail and be unable to pay its debts.

a. True b. False

7. When a bond is issued at a discount, the interest expense each year is less than the cash payment for interest.

a. True b. False

8. In an operating lease, the lessee acquires the right to use an asset for only a limited period of time.

a. True b. False

9. A lease is accounted for as a capital lease if the lease term is 75% or more of the property's economic life.

a. True b. False

10. Most investors would prefer to see equity rather than debt on the balance sheet.

a. True b. False

11. The asset leased under an operating lease requires the lessee to record depreciation expense.

a. True b. False

12. An investor views a high debt-to-equity ratio and a low times interest earned as a favorable sign of a companys abilities to meet its long-term obligations

. a. True b. False

13. When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings

. a. True b. False

14. Book value is a measure of the market value of the stock.

a. True b. False

15. The statement of cash flows summarizes the operating, investing, and financing activities of a business for a period of time.

a. True b. False