Effects of Transactions Upon Financial Measurements
Five Events Relating to Liabilities

question 122

Essay

Effects of transactions upon financial measurements
Five events relating to liabilities are described below:
(a) Recorded a bi-weekly payroll, including the issuance of paychecks to employees. Amounts withheld from employees' pay and payroll taxes will be forwarded to appropriate agencies in the near future. (Ignore postretirement costs.)
(b) Made a monthly payment on a 12-month installment note payable, including interest and a partial repayment of the principal amount.
(c) Shortly before the maturity date of a six-month bank loan, made arrangements with the bank to refinance the loan on a long-term basis.
(d) Made an adjusting entry to record accrued interest payable on a 2-year bank loan (interest is paid monthly.)
(e) Made a year-end adjusting entry to amortize a portion of the discount on long-term bonds payable.
Indicate the immediate effects of each transaction or adjusting entry upon the financial measurements in the five column headings listed below. Use the code letters, I for increase, D for decrease, and NE for no effect.
$$\begin{array} { | l | c | c | c | c | c | } \hline \text { Transaction } & \text { Current } & \text { Long-Term } & \text { Net } & \text { Net Cash Flow } & \text { (Other than } \\\hline & \text { Liabilities } & \text { Liabilities } & \text { Income } & \text { (All Activities } & \text { Operating } \\\hline & & & & \text { Combined) } & \text { Activities) } \\\hline \text { (a) } &\underline{\quad\quad} & \underline{\quad\quad}&\underline{\quad\quad} & \underline{\quad\quad}& \underline{\quad\quad} \\\hline \text { (b) } & \underline{\quad\quad} &\underline{\quad\quad}&\underline{\quad\quad}&\underline{\quad\quad}&\underline{\quad\quad} \\\hline \text { (c) } & \underline{\quad\quad}& \underline{\quad\quad} &\underline{\quad\quad} &\underline{\quad\quad} & \underline{\quad\quad} \\\hline \text { (d) } &\underline{\quad\quad} & \underline{\quad\quad}& \underline{\quad\quad}&\underline{\quad\quad} &\underline{\quad\quad} \\\hline \text { (e) } & \underline{\quad\quad}& \underline{\quad\quad}& \underline{\quad\quad}&\underline{\quad\quad} &\underline{\quad\quad} \\\hline\end{array}$$

Understand organizational fundamentals including division of labor, hierarchy of authority, and decision-making structures.

Analyze the role of environmental factors and technological interdependence in choosing organization design.

Recognize the characteristics and disadvantages of bureaucracy in organizations.

Understand the concepts of differentiation, integration, centralization, and decentralization in organizational structure.

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Definitions:

Unethical Communications

Sharing information in a way that violates moral principles or professional standards.

Ethical Dilemma

A situation where a person must choose between conflicting moral principles, making it difficult to decide the right course of action.

Ethical Lapse

A failure to act in a morally correct way, often resulting in actions that are unethical or improper.

Ethical Communication

Involves sharing information in a way that is fair, honest, and respectful to all parties involved, adhering to moral principles.