Question 1

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would most likely be classified as a current liability?

Accepted Answer

A)   two-year notes payable
B)   bonds payable
C)   mortgage payable
D)   unearned rentE) All of the above
F) A) and C)

Question 3

The journal entry used to record the payment of a discounted note is

Accepted Answer

A)   debit Notes Payable and Interest Expense; credit Cash
B)   debit Notes Payable; credit Cash
C)   debit Cash; credit Notes Payable
D)   debit Accounts Payable; credit CashE) A) and B)
F) A) and C)

Question 4

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

Accepted Answer

A)   Rodriguez is the creditor and credits Accounts Receivable
B)   Wilson is the creditor and debits Accounts Receivable
C)   Wilson is the borrower and credits Accounts Payable
D)   Rodriguez is the borrower and debits Accounts PayableE) A) and B)
F) B) and C)

Question 5

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Accepted Answer

A)   debit Cash; credit Accounts Payable
B)   debit Accounts Payable; credit Cash
C)   debit Cash; credit Notes Payable
D)   debit Accounts Payable; credit Notes PayableE) A) and B)
F) C) and D)

Question 6

A current liability is a debt that is reasonably expected to be paid

Accepted Answer

A)   between 6 months and 18 months
B)   out of currently recognized revenues
C)   within one year
D)   out of cash currently on handE) A) and B)
F) None of the above

Question 7

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be

Accepted Answer

A)   $51,125
B)   $54,500
C)   $1,125
D)   $4,500E) None of the above
F) B) and D)

Question 8

The accounting for defined benefit plans is usually very easy and straightforward.

Accepted Answer

A) True 
 B)False

Question 9

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

Accepted Answer

A) True 
 B)False

Question 10

Medicare taxes are paid by both the employee and the employer.

Accepted Answer

A) True 
 B)False

Question 11

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

Accepted Answer

A)   funded
B)   unfunded
C)   defined benefit
D)   defined contributionE) None of the above
F) B) and D)

Question 12

Interest expense is reported in the operating expense section of the income statement.

Accepted Answer

A) True 
 B)False

Question 13

Quick assets include

Accepted Answer

A)   cash,cash equivalents,receivables,prepaid expenses,and inventory
B)   cash,cash equivalents,receivables,and prepaid expenses
C)   cash,cash equivalents,receivables,and inventory
D)   cash,cash equivalents,and receivablesE) All of the above
F) C) and D)

Question 14

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

Accepted Answer

A) True 
 B)False

Question 15

The current portion of long-term debt should

Accepted Answer

A)  Be classified as a long-term liability
B)  Not be separated from the long-term portion of debt
C)  Be paid immediately
D)  Be reclassified as a current liabilityE) A) and D)
F) B) and D)

Question 16

Match the following terms or phrases in (a-g) with the explanations in 1-8.Terms or phrases may be used more than once.
-Remote contingent liability

Accepted Answer

A)  Current ratio
B)  Working capital
C)  Quick assets
D)  Quick ratio
E)  Record an accrual and disclose in the notes to the financial statementsF) Disclose only in notes to financial statementsG) No disclosure needed in notes to financial statements H) C) and F)
I) C) and D)

Question 17

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Assuming the social security rate is 6% and Medicare is 1.5%,and all earnings are subject to FICA taxes,what is Green's net pay?

Accepted Answer

The answer of Baker Green's weekly gross earnings for the...

Question 18

Several months ago,Maximilien Company experienced a spill of radioactive materials into the Missouri River from one of its plants.As a result,the Environmental Protection Agency (EPA)fined the company $1,750,000.The company contested the fine.In addition,an employee is seeking $975,000 damages related to the spill.Finally,a homeowner has sued the company for $580,000.Although the homeowner lives 15 miles downstream from the plant,he believes that the spill has reduced his home's resale value by $580,000.
Maximilien's legal counsel believes the following will happen in relationship to these incidents:
  ​

Accepted Answer

The answer of Several months ago,Maximilien Company experienced a spill...

Question 19

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is remote and amount is not estimable

Accepted Answer

A)  Record only
B)  Record and disclose
C)  Disclose only
D)  Do not record or disclose E) None of the above
F) B) and D)

Question 20

Florida Keys Construction installs swimming pools.It calculates that warranty obligations are 3% of sales.For the year just ending,Florida Keys' sales were $1,450,000.Previous quarterly entries debiting Product Warranty Expense totaled $28,700.Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

Accepted Answer

Due to sales of $1,450,000,war...

Exam 10: Liabilities: Current,installment Notes,and Contingencies

Correct Answer
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Correct Answer
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Due to sales of $1,450,000,war...
View Answer

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

Correct Answer
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Quick assets include

Correct Answer
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Interest expense is reported in the operating expense section of the income statement.

Correct Answer
verified

Medicare taxes are paid by both the employee and the employer.

Correct Answer
verified

A current liability is a debt that is reasonably expected to be paid

Correct Answer
verified

Which of the following would most likely be classified as a current liability?

Correct Answer
verified

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Assuming the social security rate is 6% and Medicare is 1.5%,and all earnings are subject to FICA taxes,what is Green's net pay?

Correct Answer
verified

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

Correct Answer
verified

The journal entry used to record the payment of a discounted note is

Correct Answer
verified

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

Correct Answer
verified

The current portion of long-term debt should

Correct Answer
verified

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Correct Answer
verified

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

Correct Answer
verified

Match the following terms or phrases in (a-g) with the explanations in 1-8.Terms or phrases may be used more than once. -Remote contingent liability

Correct Answer
verified

The accounting for defined benefit plans is usually very easy and straightforward.

Correct Answer
verified

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

Correct Answer
verified

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be

Correct Answer
verified

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

Correct Answer
verified

Exam 10: Liabilities: Current,installment Notes,and Contingencies

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDue to sales of $1,450,000,war...View AnswerShow Answer

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

Correct AnswerverifiedShow Answer

Quick assets include

Correct AnswerverifiedShow Answer

Interest expense is reported in the operating expense section of the income statement.

Correct AnswerverifiedShow Answer

Medicare taxes are paid by both the employee and the employer.

Correct AnswerverifiedShow Answer

A current liability is a debt that is reasonably expected to be paid

Correct AnswerverifiedShow Answer

Which of the following would most likely be classified as a current liability?

Correct AnswerverifiedShow Answer

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Assuming the social security rate is 6% and Medicare is 1.5%,and all earnings are subject to FICA taxes,what is Green's net pay?

Correct AnswerverifiedShow Answer

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

Correct AnswerverifiedShow Answer

The journal entry used to record the payment of a discounted note is

Correct AnswerverifiedShow Answer

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

Correct AnswerverifiedShow Answer

The current portion of long-term debt should

Correct AnswerverifiedShow Answer

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Correct AnswerverifiedShow Answer

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

Correct AnswerverifiedShow Answer

Match the following terms or phrases in (a-g) with the explanations in 1-8.Terms or phrases may be used more than once. -Remote contingent liability

Correct AnswerverifiedShow Answer

The accounting for defined benefit plans is usually very easy and straightforward.

Correct AnswerverifiedShow Answer

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

Correct AnswerverifiedShow Answer

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be

Correct AnswerverifiedShow Answer

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
Due to sales of $1,450,000,war...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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