Indicate Whether Each of the Following Statements Is True or False

question 8

Short Answer

Indicate whether each of the following statements is true or false.
________ a)An eight-month,6% note for $10,000 will require the issuer to pay $600 in interest.
________ b)Interest expense is considered an operating expense on the income statement.
________ c)Payment of interest is considered an operating activity on the statement of cash flows.
________ d)Payment of interest on a one-year note due on March 1 will include a reduction in liabilities.
________ e)The adjusting entry to recognize interest expense is an asset use transaction.

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and goods, used to generate income or wealth.

Labor

The utilization of human physical and mental capabilities in the crafting of goods and delivery of services.

Price Of Labor

The compensation workers receive for their labor, typically in the form of wages or salaries.

Price Of Capital

The cost of using capital funds, often reflected in the interest rate or return required by investors for investing capital or funds.