On July 1,2013,Avery Services Issued a 4% Long-Term Note Payable

question 7

True/False

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year.Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period.On July 1,2014,after the first installment payment is made,Avery will have to reclassify an additional $2,000 from long-term notes payable to the current portion of long-term notes payable.

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Definitions:

Projected Benefit Obligation

An actuarial estimate of the total retirement benefits, under a pension plan, that an employee has earned to date, based on expected future salary levels.

Projected Benefit Obligation

The present value of expected future payouts for pension plan benefits.

Unrecognized Prior Service Cost

Unrecognized Prior Service Cost represents expenses for pension plan benefits earned in prior periods not yet recognized in financial statements.

Straight-Line Method

A depreciation method that allocates an equal amount of the asset's cost to each year of its useful life.