The Following Items Are Taken from the Financial Statements of the Freight

question 171

Multiple Choice

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: $\begin{array}{ll}\text { Accounts payable } & \$ 19,000 \\\text { Accounts receivable } & 13,000 \\\text { Accumulated depreciation - equipment } & 26,000 \\\text { Advertising expense } & 21,200 \\\text { Cash } & 15,000\\\text { Owner's capital }(1 / 1 / 16) & 104,000 \\\text { Owner's drawings } & 11,000 \\\text { Depreciation expense } & 12,000 \\\text { Insurance expense } & 3,800 \\\text { Note payable, due } 6 / 30 / 17 & 72,000\\\text { Prepaid insurance (12-month policy) } & 7,200 \\\text { Rent expense } & 16,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 135,000 \\\text { Supplies } & 5,000 \\\text { Supplies expense } & 6,000 \\\text { Equipment } & 210,000\end{array}$ The current assets should be listed on Freight Service's balance sheet in the following order:

• A) cash accounts receivable prepaid insurance equipment.
• B) cash prepaid insurance supplies accounts receivable.
• C) cash accounts receivable prepaid insurance supplies.
• D) equipment supplies prepaid insurance accounts receivable cash.

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Definitions:

Ordinary Annuity

A succession of equivalent remittances occurring at regular intervals for a certain stretch of time.

Deferred Annuity

An insurance product that provides future payments to the holder, usually after retirement, where payments are delayed for a certain period.

Ordinary Annuity

A financial product resulting in a stream of payments to the holder at regular intervals over a specified period of time, typically at the end of each period.

Deferred Annuity

An insurance product that delays income payments until the investor elects to receive them, typically at retirement.