Effects of Transactions Upon Financial Measurements
Five Events Relating to Liabilities

question 57

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.
$\begin{array}{|l|c|c|c|c|c|}\hline\text { Transaction } & \begin{array}{c}\text { Current } \\\text { Liabilities }\end{array} & \begin{array}{c}\text { Noncurrent } \\\text { Liabilities }\end{array} & \text { Profit } & \begin{array}{c}\text { Net Cash Flow } \\\text { (All Activities } \\\text { Combined) }\end{array} & \begin{array}{c}\text { (other than } \\\text { operating } \\\text { Activities) }\end{array} \\\hline \text { (a) } &\\\hline \text { (b) } & \\\hline \text { (c) } & \\\hline \text { (d) } & \\\hline \text { (e) } &\\\hline\end{array}$

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Definitions:

Bottom-Up Processing

A perception approach where processing starts with sensory input and works up to the formation of a perception.

Telepathy

A supposed method of communication from one mind to another without using sensory channels or physical interaction.

Subliminal Stimuli

External stimuli that are below the threshold for conscious perception, yet can influence thoughts, feelings, or actions.

Selective Perceptions

The psychological process by which individuals perceive what they want in media messages while ignoring opposing viewpoints.