On March 1,2018,Barker Services Issued a 5% Long-Term Notes Payable

question 77

Multiple Choice

On March 1,2018,Barker Services issued a 5% long-term notes payable for $21,000.It is payable over a 3-year term in $7000 annual principal payments on March 1 of each year plus interest,beginning March 1,2019.How will the notes payable be shown on the balance sheet dated December 31,2018?

• A) $21,000 shown as current liability only
• B) $7000 shown as current liability and $21,000 shown as long-term liability
• C) $7000 shown as current liability and $14,000 shown as long-term liability
• D) the entire $21,000 shown as long-term liability

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Definitions:

Activity Bases

Measures that assign costs to cost objects based on their use of activities; used in activity-based costing.

Mixed Cost

A cost consisting of both fixed and variable components and changes in response to variations in production or sales levels.

Variable And Fixed Cost

Expenses that include both variable costs, which fluctuate with production or service levels, and fixed costs, which remain constant regardless of activity.

Mixed Cost

A cost consisting of a fixed component and a variable component, changing in total with the level of activity but remaining constant per unit.