Use the Following to Answer Questions

question 2

Multiple Choice

Use the following to answer questions
Seattle Company issued a $90,000 face value discount note payable to the First Federal Bank on September 1,2016.The note carried a one-year term and a 4% discount rate.
-The carrying value of the liability appearing on the December 31,2016 balance sheet will amount to:

• A)$80,400
• B)$87,600
• C)$90,000
• D)$88,800

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Definitions:

Net Operating Income

An indicator of a firm's earnings generated from its principal business activities, not accounting for interest and tax deductions.

Variable Costing

An accounting method that includes only variable production costs in product costs, excluding fixed overhead.

Absorption Costing

An accounting strategy that considers every manufacturing expense, including direct materials, direct labor, and overhead costs (both variable and fixed), in determining a product’s cost.

Income Statement

A financial statement that shows a company's revenue, expenses, and profits over a specific period, usually a fiscal quarter or year.