Multiple Choice Answers

ONECO gives a one-year warranty on all of its equipment. In January, a customer placed an order for a piece of equipment. The equipment was delivered and billed in February. The customer remitted half of the cash due in March and the other half in April. According to the matching principle of accounting, in which month should ONECO report estimated warranty expense related to the sale?
A. January
B. February
C. March
D. April
E. December

Which of the following affects both the balance sheet and the income statement?
A. Purchase of inventory
B. Retirement of a fully depreciated machine
C. Collection of accounts receivable
D. Amortization of prepaid insurance
E. Declaration of a cash dividend

A mortgage of $420,000 has principal payments totaling $120,000 that are due within the next year. The remaining $300,000 is not due until after one year. How is the mortgage shown on the balance sheet?
A. As a current liability of $420,000
B. As a long-term liability of $420,000
C. As another liability of $420,000 with a footnote breaking out current and long-term portions
D. As a current liability of $120,000 and a long-term liability of $300,000
E. As a disclosure item only