Applegate Company Experienced an Accounting Event That Affected Its Financial

question 113

Multiple Choice

Applegate Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Knight's statements?

• A) paid interest and principal on loan
• B) borrowed funds through a line of credit
• C) paid interest on bonds
• D) repaid principal on bonds at maturity

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Definitions:

GAAP

Generally Accepted Accounting Principles; a set of accounting standards and practices used for financial reporting in the U.S.

True Locality Rule

A legal principle ensuring that a case is tried in the jurisdiction where the events in question occurred.

Standard Of Care

The degree of care and caution required by law, which a reasonable person should take in a specific situation.

Socioeconomic Character

Descriptive attributes of individuals or groups based on their economic and social position in society.