Use the Following to Answer Questions

question 38

Short Answer

Use the following to answer questions
On January 1,2016,the Niagara Corporation arranges a $6,000 line of credit with the Centennial Bank.It accepted the bank's offer of 1% above the prime rate with interest payments on December 31 of each year.All borrowings and repayments are to take place on January 1 of each year.
-Niagara records the first year's interest payment on December 31,2016.Centennial's prime rate is 4% for 2016.Which of the following answers shows the effect of this event on the financial statements?

Identify the users of accounting information and understand the various purposes for which it is used.

Describe the activities presented in the statement of cash flows and understand its importance.

Understand the balance sheet's purpose, structure, and its role in financial reporting.

Recognize the importance of ethics in accounting and the role of generally accepted accounting principles.

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Definitions:

Monetary Exchange

The process of trading goods and services using money as a medium of exchange rather than direct barter.

Double Coincidence

A situation in a barter system where two parties each have something the other wants, allowing for an exchange without the need for money.

Limited Specialization

A situation in which individuals or entities focus on a restricted range of products or services to gain greater efficiency, but do not specialize to the extent that they produce only one good or service.

Primitive Societies

Early human communities characterized by simple social structures and technologies.