On January 1, 2020, Ermler Company, a Calendar-Year Company, Issued

question 103

Multiple Choice

On January 1, 2020, Ermler Company, a calendar-year company, issued $2,000,000 of notes payable, of which $500,000 is due on January 1 for each of the next four years.The proper balance sheet presentation on December 31, 2020, is

• A)Current liabilities, $2,000,000.
• B)Long-term debt , $2,000,000.
• C)Current liabilities, $500,000; Long-term Debt, $1,000,000.
• D)Current liabilities, $500,000; Long-term Debt, $1,500,000.

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Definitions:

Monopolistically Competitive

A market structure characterized by many firms selling products that are substitutes but not perfect substitutes, leading to some degree of market power for each firm.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and loan repayments.

Short Run

A period in which at least one of a firm's inputs is fixed and cannot be changed.

Monopolistically Competitive

A market structure with many firms selling products that are substitutes but differentiated enough that each firm's product has its own demand.