Question: 6. Current liabilities are normally recorded at the amount expected to be paid rather than at their present value. This practice can be supported by

6. Current liabilities are normally recorded at the amount expected to be paid rather than at their present value. This practice can be supported by GAAP according to the concept of

A. matching.

B. consistency.

C. materiality.

D. conservatism.

7. Leaf, Inc., bought 15,000 shares of Lazy Co.'s stock for $150,000 on May 5, 2016 and classified the stock as available for sale. The market value of the stock declined to $118,000 by December 31, 2016. Leaf reclassified this investment as trading securities in December of 2017 when the market value had risen to $125,000. What effect on 2017 income should be reported by Leaf for the Lazy Co. shares?

A. $25,000 net loss

B. $0

C. $32,000 net loss

D. $7,000 net gain

8.Eagle Corporation purchased 1,000 Gem Corporation bonds in 2015 for $500 per bond and classified the investment as securities available-for-sale. The value of the Gem investment was $600 per bond on December 31, 2016, and $650 on December 31, 2017. During 2018, Eagle sold all of its Gem investment at $700 per bond. In its 2018 income statement, Eagle would report a gain of

A. $300,000.

B. $150,000.

C. $50,000.

D. $200,000.

9. Large, highly rated firms sometimes sell commercial paper

A. to borrow funds at a lower rate than through a bank.

B. to avoid paperwork.

C. because the interest rate is locked in by the Federal Reserve Board.

D. to earn a profit on the paper.

10. Tyrone Oil Corp. paid interest of $785,000 during 2017, and the interest payable account decreased by $125,000. What was interest expense for the year?

A. $890,000

B. $785,000

C. $660,000

D. $555,000

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