Reference no: EM132765972

Problem 1: Of the following items, the one which should be classified as a current liability is

a) An accommodation endorsement on a demand note issued by an affiliated company.

b) A cash dividend declared before the balance sheet date when the date of record is subsequent to the balance sheet date.

c) Unfunded past service costs of a pension plan to the extent that benefits have not vested and the costs have not been charged to operations.

d) Dividends in arrears on cumulative preferred stock.

Problem 2: When the effective interest method is used to amortize bond premium or discount, the periodic amortization will

a) increase if the bonds were issued at a discount.

b) decrease if the bonds were issued at a premium.

c) increase if the bonds were issued at a premium.

d) increase if the bonds were issued at either a discount or a premium.