Question 1

Which statement is correct about financial and non-financial liabilities?

Accepted Answer

A) A non-financial liability is a contractual obligation to deliver cash to another party. 
B) A non-financial liability does not meet all of the criteria for a "liability." 
C) The two liabilities are valued differently for financial reporting purposes. 
D) A non-financial liability is measured at fair value rather than amortized cost. 
A) A non-financial liability is a contractual obligation to deliver cash to another party. 
B) A non-financial liability does not meet all of the criteria for a "liability." 
C) The two liabilities are valued differently for financial reporting purposes. 
D) A non-financial liability is measured at fair value rather than amortized cost. C

Question 2

Which is a reason to use the net method to record purchase discounts?

Accepted Answer

A) Cost-benefit factor is greater for the net method. 
B) Reporting "purchase discounts lost" signifies inefficient business practices. 
C) Given the materiality of the amounts involved,the net method is used. 
D) The net method is technically superior to the gross method. 
A) Cost-benefit factor is greater for the net method. 
B) Reporting "purchase discounts lost" signifies inefficient business practices. 
C) Given the materiality of the amounts involved,the net method is used. 
D) The net method is technically superior to the gross method. D

Question 3

Indemnities and letters of credit are examples of?

Accepted Answer

A) Commitments. 
B) Provisions. 
C) Contingencies. 
D) Guarantees. 
A) Commitments. 
B) Provisions. 
C) Contingencies. 
D) Guarantees. D

Question 4

What are "liabilities"? Differentiate between financial liabilities and nonfinancial liabilities.

Accepted Answer

• Liabilities are present obligations of

Question 5

Which statement is correct about provisions,contingent assets and contingent liabilities?

Accepted Answer

A) Provisions are recorded in the financial statements whereas contingent assets are not recorded. 
B) Provisions are recorded in the financial statements whereas contingent liabilities are not recorded. 
C) Probable contingent liabilities are recorded at management's best estimates. 
D) Probable contingent assets are recorded at management's best estimates. 
A) Provisions are recorded in the financial statements whereas contingent assets are not recorded. 
B) Provisions are recorded in the financial statements whereas contingent liabilities are not recorded. 
C) Probable contingent liabilities are recorded at management's best estimates. 
D) Probable contingent assets are recorded at management's best estimates.

Question 6

For a $200,000 trade payable with terms of 2/15,net 50,how much would be reported as "purchase discount lost" under the net method if a payment was made after 60 days?

Accepted Answer

A) $0 
B) $4,000 
C) $5,000 
D) $30,000 
A) $0 
B) $4,000 
C) $5,000 
D) $30,000

Question 7

For the following transaction,provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar.

Accepted Answer

Issuance @#IMG-DLM&

Question 8

Which statement about contingent liabilities is correct?

Accepted Answer

A) It is a possible obligation that arises from past transactions and events. 
B) It is an obligation that arises from past transactions and events. 
C) It involves uncertainty about either the timing or amount of payment. 
D) It is a condition that depends upon the outcome of an anticipated event. 
A) It is a possible obligation that arises from past transactions and events. 
B) It is an obligation that arises from past transactions and events. 
C) It involves uncertainty about either the timing or amount of payment. 
D) It is a condition that depends upon the outcome of an anticipated event.

Question 9

Which is a non-current liability?

Accepted Answer

A) HST payable. 
B) 45 day accounts payable. 
C) Five year loan that matures four months after year end reporting date. 
D) The creditor has granted a 15-month grace period on a loan in default. 
A) HST payable. 
B) 45 day accounts payable. 
C) Five year loan that matures four months after year end reporting date. 
D) The creditor has granted a 15-month grace period on a loan in default.

Question 10

Explain the meaning of the following terms: current assets,trade payables,expected value,deferred revenue and warranty.

Accepted Answer

Current assets: Assets that are expected

Question 11

Which statement is not correct?

Accepted Answer

A) "Purchase discount lost" is reported if the gross method is used. 
B) Cut off means that obligations are reported in the proper accounting period. 
C) Supplier discounts can be accounted for by using the gross method. 
D) Trade payables are obligations for goods received or services used. 
A) "Purchase discount lost" is reported if the gross method is used. 
B) Cut off means that obligations are reported in the proper accounting period. 
C) Supplier discounts can be accounted for by using the gross method. 
D) Trade payables are obligations for goods received or services used.

Question 12

For each independent situation:
1. Moosehead Pool and Skeet Com.'s debt to equity ratio is 1.6: 1 based on its draft financial statements for the year ended December 31,2016. This leverage ratio exceeds the 1.5:1 maximum stipulated in Moosehead's loan agreement pertaining to a $5,000,000 loan maturing on March 15,2019. The loan agreement stipulates that the loan becomes payable on demand upon breach of any of the loan covenants. Moosehead's creditors agreed on December 15,2016 to waive their right to demand payment until December 31,2017 for reason only that the firm's leverage ratio exceeds the stipulated maximum.
2. Guelph Piano Storage Inc. issued a $30,000,30-day,non-interest bearing note to Roland's Crating for storage bins. The market rate of interest for similar transactions is 2.5%.
3. On November 30,2014,Port Meadow Fertilizer Ltd. entered into a non-cancellable agreement to buy 10 tonnes of phosphorus for $1,600 per tonne for delivery on February 28,2015. Phosphorus is a key component of the custom fertilizer that Port Meadow produces. The market price of phosphorus is extremely volatile,as evident by the $1,175 per tonne that it could be acquired for on December 31,2014. Notwithstanding the premium price paid for the phosphorus,the company expects that fertilizer sales will remain profitable. Port Meadow's year-end is December 31,2014.
Requirement:
For each of the situations described above,prepare the required journal entry for the underlined entity. If a journal entry is not required,explain why.

Accepted Answer

1. A journal entry is not required as th

Question 13

What are the three broad categories of liabilities?

Accepted Answer

The three broad categories of

Question 14

Which of the following characteristic is required for a "liability" under IFRS Framework?

Accepted Answer

A) Arises from a past transaction. 
B) Arises from a non-financial transaction. 
C) Arises from a future transaction. 
D) Arises from a forecasted transaction. 
A) Arises from a past transaction. 
B) Arises from a non-financial transaction. 
C) Arises from a future transaction. 
D) Arises from a forecasted transaction.

Question 15

Which statement about contingencies is correct?

Accepted Answer

A) If the future outcome is possible and reliably measurable,a provision is recorded. 
B) If the future outcome is possible,but reliably measurable,no action is required. 
C) If the future outcome is possible,but not reliably measurable,no action is required. 
D) If the future outcome is possible,but reliably measurable,disclosure is required. 
A) If the future outcome is possible and reliably measurable,a provision is recorded. 
B) If the future outcome is possible,but reliably measurable,no action is required. 
C) If the future outcome is possible,but not reliably measurable,no action is required. 
D) If the future outcome is possible,but reliably measurable,disclosure is required.

Question 16

Which statement about sales taxes is correct?

Accepted Answer

A) Businesses can recover the PST paid on all of their purchases. 
B) Goods purchased for resale are exempt from PST. 
C) Businesses remit only the GST collected on sales transactions. 
D) The same products that are exempt from HST are exempt from PST. 
A) Businesses can recover the PST paid on all of their purchases. 
B) Goods purchased for resale are exempt from PST. 
C) Businesses remit only the GST collected on sales transactions. 
D) The same products that are exempt from HST are exempt from PST.

Question 17

A company purchases inventory on credit for $40,000. Inventory costing $30,000 is sold on credit for $50,000. The applicable HST rate is 10%. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Accepted Answer

Purchase of inventor

Question 18

Sales made in fiscal 2012 for $50,000,000 include a 5 year warranty coverage. The estimated cost for warranty is expected to be 2% for the first 4 years and 5% for the last year. Determine how much warranty expense will be recorded in fiscal 2012.

Accepted Answer

A) 1,000,000 
B) 4,000,000 
C) 5,000,000 
D) 6,500,000 
A) 1,000,000 
B) 4,000,000 
C) 5,000,000 
D) 6,500,000

Question 19

A company,using a perpetual inventory system,sells goods on credit for $10,000. The applicable PST rate is 5% and the cost of goods sold was $6,000. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Accepted Answer

Sale of go

Question 20

Which statement is not correct?

Accepted Answer

A) Contingencies arise from past events. 
B) Financial guarantees arise from contracts previously entered into. 
C) The amount to be paid for financial guarantees is known or reasonably estimable. 
D) The amount to be paid for current liabilities is known or reasonably estimable. 
A) Contingencies arise from past events. 
B) Financial guarantees arise from contracts previously entered into. 
C) The amount to be paid for financial guarantees is known or reasonably estimable. 
D) The amount to be paid for current liabilities is known or reasonably estimable.

Which statement is correct about financial and non-financial liabilities?

Which is a reason to use the net method to record purchase discounts?

Indemnities and letters of credit are examples of?

What are "liabilities"? Differentiate between financial liabilities and nonfinancial liabilities.

Which statement is correct about provisions,contingent assets and contingent liabilities?

For a $200,000 trade payable with terms of 2/15,net 50,how much would be reported as "purchase discount lost" under the net method if a payment was made after 60 days?

For the following transaction,provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar.

Which statement about contingent liabilities is correct?

Which is a non-current liability?

Explain the meaning of the following terms: current assets,trade payables,expected value,deferred revenue and warranty.

Which statement is not correct?

What are the three broad categories of liabilities?

Which of the following characteristic is required for a "liability" under IFRS Framework?

Which statement about contingencies is correct?

Which statement about sales taxes is correct?

A company purchases inventory on credit for $40,000. Inventory costing $30,000 is sold on credit for $50,000. The applicable HST rate is 10%. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Sales made in fiscal 2012 for $50,000,000 include a 5 year warranty coverage. The estimated cost for warranty is expected to be 2% for the first 4 years and 5% for the last year. Determine how much warranty expense will be recorded in fiscal 2012.

A company,using a perpetual inventory system,sells goods on credit for $10,000. The applicable PST rate is 5% and the cost of goods sold was $6,000. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Which statement is not correct?

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Filters

Exam 1: Current Liabilities and Contingencies

Which statement is correct about financial and non-financial liabilities?

Which is a reason to use the net method to record purchase discounts?

Indemnities and letters of credit are examples of?

What are "liabilities"? Differentiate between financial liabilities and nonfinancial liabilities.

Which statement is correct about provisions,contingent assets and contingent liabilities?

For a $200,000 trade payable with terms of 2/15,net 50,how much would be reported as "purchase discount lost" under the net method if a payment was made after 60 days?

For the following transaction,provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar.

Which statement about contingent liabilities is correct?

Which is a non-current liability?

Explain the meaning of the following terms: current assets,trade payables,expected value,deferred revenue and warranty.

Which statement is not correct?

What are the three broad categories of liabilities?

Which of the following characteristic is required for a "liability" under IFRS Framework?

Which statement about contingencies is correct?

Which statement about sales taxes is correct?

A company purchases inventory on credit for $40,000. Inventory costing $30,000 is sold on credit for $50,000. The applicable HST rate is 10%. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Sales made in fiscal 2012 for $50,000,000 include a 5 year warranty coverage. The estimated cost for warranty is expected to be 2% for the first 4 years and 5% for the last year. Determine how much warranty expense will be recorded in fiscal 2012.

A company,using a perpetual inventory system,sells goods on credit for $10,000. The applicable PST rate is 5% and the cost of goods sold was $6,000. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction.

Which statement is not correct?

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Filters