[The Following Information Applies to the Questions Displayed Below

question 72

Multiple Choice

[The following information applies to the questions displayed below.]
On January 1, Year 1, Mahoney Company borrowed $324,000 cash from Sun Bank by issuing a 5-year, 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan equals $81,150.
-Which of the following shows the effects on the elements of the financial statement of the cash payment on December 31,Year 1?

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

One-tailed Test

A statistical test where the region of rejection is on only one side of the sampling distribution.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it is a threshold used to determine the critical region for statistical significance testing.

Test Statistic

A figure determined from data samples, which is used during a hypothesis test to evaluate whether to refuse the null hypothesis.

Type I Error

An erroneous denial of a valid null hypothesis, commonly called a "false positive."