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Question 6. (TCO D) Which of the following best describes the cash-basis method of accounting for warranty costs? Expensed based on estimate in year of sale Expensed when liability is accrued Expensed when warranty claims are certain Expensed when incurred Question 7. (TCO D) The term used for bonds that are unsecured regarding principal is junk bonds. debenture bonds. in-debenture bonds. callable bonds. Question 8. (TCO D) On November 1, Year 1, Dixon Corporation issued $800,000 of its 10-year, 8% term bonds dated October 1, Year 1. The bonds were sold to yield 10%, with total proceeds of $700,000 plus accrued interest. Interest is paid every April 1 and October 1. What amount should Dixon report for interest payable in its December 31, Year 1 balance sheet? $17,500