On October 1, 2011, Master's Co

question 117

Multiple Choice

On October 1, 2011, Master's Co. borrows $500,000 from its bank for five years at an annual interest rate of 10%. According to the terms of the loan, the principal amount will not be due for five years. Interest is to be paid monthly on the first day of each month, beginning November 1, 2011. With respect to this borrowing, Master's December 31, 2011, balance sheet included only a long-term note payable of $500,000. As a result:

• A) The December 31, 2011, financial statements are accurate.
• B) Liabilities are understated by $12,500 accrued interest payable.
• C) Liabilities are understated by $4,167 accrued interest payable.
• D) Liabilities are understated by the amount of interest for the five-year term of the note that has not yet been paid.

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Definitions:

1960s

A decade marked by significant social, cultural, and political changes around the world, including the civil rights movement, counterculture, and significant advancements in science and technology.

Sunbelt

A region in the United States comprising the Southeast and the Southwest, known for its warm climate, growing economic opportunities, and significant population growth in the late 20th century.

Second Wave Feminism

A movement that began in the early 1960s in the United States focusing on issues of equality and discrimination, including workplace inequality, legal inequalities, and reproductive rights.

Civil Rights Movement

The struggle for social justice in the 1950s and 1960s in the United States, primarily aiming to end racial discrimination and gain equal rights under the law for African Americans.