Anthony Loaned $2,000 to Cleopatra for One Year at 10

question 94

Multiple Choice

Anthony loaned $2,000 to Cleopatra for one year at 10% interest, all due at maturity. He insisted the terms of the transaction be formalized in a promissory note. In this situation:

• A) The maturity value of the note is $2,000.
• B) Anthony is considered the maker of the note and records the note as an asset in his accounting records.
• C) Anthony is considered the maker of the note and records the note as a liability in his accounting records.
• D) Cleopatra is considered the maker of the note and records the note as a liability in her [his] accounting records.

Interpret and solve for net operating income under different scenarios.

Grasp the impact of cost behavior on budgeting and performance evaluation.

Distinguish between favorable and unfavorable variances and their implications for management.

Apply budgeting concepts to various scenarios including service companies, cleaning and maintenance operations, and medical clinics.

---

Definitions:

S Corporation

A special designation of corporation that allows for pass-through taxation, where the corporation's income is taxed at the shareholder level, rather than at the corporate level.

Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on part of the corporation's assets and earnings.

U.S. Citizens

Individuals who possess citizenship of the United States, either by birth or naturalization.

Franchise Agreements

Legal contracts between franchisors and franchisees that outline the terms and conditions for operating a franchise business.