Exam 13: Current Liabilities and Contingencies

Which payroll tax is imposed on both the employee and the employer?

A gain contingency that is reasonably possible and for which the amount can be reasonably estimated should be

Exhibit 13-3 Paul Company includes three coupons in each package of crackers it sells.In exchange for 20 coupons, a customer will receive a cheese plate.Paul estimates that 30% of the coupons will be redeemed.In 2010, Paul sold 4, 000, 000 boxes of crackers and purchased 150, 000 cheese plates at $2.50 each.During the year, 970, 000 coupons were redeemed. - Refer to Exhibit 13-3.What amount should Paul report as estimated premium claims outstanding at December 31, 2010?

Which of the following contingencies is usually accrued?

Which of the following would not be an acceptable method of presenting current liabilities on the balance sheet?

Which of the following dividends are not considered current liabilities when declared?

Blocker, Inc.had $10, 000 of notes coming due on January 10, 2011.On January 5, 2011, the company used $2, 000 of excess cash to pay off part of the note.On January 8, 2011, a refinancing was completed.The $2, 000 payment was refunded and added back to the note balance, and the note was extended for another two years.On the December 31, 2010 balance sheet, how much of the $10, 000 note should be shown as current?

Which of the following statements does not describe an essential characteristic of a liability?

Exhibit 13-5 Tractor Company estimates its annual warranty expense at 4% of annual net sales.The following information relates to the calendar year 2010: Net sales \ 3,000,000 Estimated liability under warranties: January 1,2010 100,000 December 31,2010 , after year-end adjustment 80,000 - Refer to Exhibit 13-5.The amount of expenditures for warranty costs for 2010 is

Miller Company provides a bonus compensation plan under which key employees receive bonuses equal to 10% of Miller's income after deducting income taxes but before deducting the bonus.If income before income tax and the bonus is $400, 000 and the income tax rate is 30%, the bonuses should total

GAAP relating to compensated absences

Concerning accounting for warranties, which of the following statements is false?

With regard to liabilities, liquidity refers to

On the balance sheet, liabilities are generally classified as

Exhibit 13-4 During 2010, the Alexandra Company began selling a new type of machine that carries a two-year warranty against all defects.Based on past industry and company experience, estimated warranty costs should total $2, 000 per machine sold.During 2010, sales and actual warranty expenditures were $2, 000, 000 (40 machines)and $22, 000, respectively. - Refer to Exhibit 13-4.What amount should Alexandra report as its estimated warranty liability at December 31, 2010?

Exhibit 13-2 In 2010, the Markel Company sold 14, 000 washing machines.Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50.During 2010, Markel had an actual outlay of $48, 000 for repairs under warranty.Markel uses the expense warranty accrual method. - Refer to Exhibit 13-2.At what amount should the company record warranty expense for 2010?

The Ancira Company closed its books annually on December 31, while the city in which it is located has a fiscal year beginning on April 1 and ending on March 31.Taxes on property are assessed on April 1 of each year.Property taxes in the amount of $360, 000 and $400, 000 were assessed on April 1, 2010 and 2011, respectively.For the year ended December 31, 2011, the Ancira Company would report property tax expense of

Which of the following statements is true?

The Lawrence Company records its trade accounts payable net of any cash discounts.At the end of 2010, Lawrence had a balance of $300, 000 in its trade accounts payable account before any adjustments related to the following items: At what amount should Lawrence report trade accounts payable on its December 31, 2010 balance sheet?

All of the following payroll taxes are levied against the employer except