Question 1

Which one of the following transactions decreases a company's quick assets?

Accepted Answer

A) The board of directors declares a cash dividend to be paid next month. 
B) Salary expense is accrued. 
C) Depreciation expense is recorded. 
D) A payment is made for next year's insurance. 
A) The board of directors declares a cash dividend to be paid next month. 
B) Salary expense is accrued. 
C) Depreciation expense is recorded. 
D) A payment is made for next year's insurance.

Question 2

Liabilities are

Accepted Answer

A) sometimes credit and other times debit balances. 
B) deferred amounts which will be recognized on the balance sheet when the actual due date arrives. 
C) obligations arising from past transactions and payable in assets or services in the future. 
D) obligations to transfer ownership of one company to other entities. 
A) sometimes credit and other times debit balances. 
B) deferred amounts which will be recognized on the balance sheet when the actual due date arrives. 
C) obligations arising from past transactions and payable in assets or services in the future. 
D) obligations to transfer ownership of one company to other entities.

Question 3

Net worth is

Accepted Answer

A) assets plus liabilities. 
B) total income since the company began operations. 
C) total shareholders' equity. 
D) another name for net income. 
A) assets plus liabilities. 
B) total income since the company began operations. 
C) total shareholders' equity. 
D) another name for net income.

Question 4

Sweeney, Inc. borrowed $30,000 from the bank by signing a 9-month note payable. The proper accounting treatment of recording the note will

Accepted Answer

A) increase assets and liabilities. 
B) decrease assets and increase liabilities. 
C) increase liabilities and owners' equity. 
D) increase assets and decrease owners' equity. 
A) increase assets and liabilities. 
B) decrease assets and increase liabilities. 
C) increase liabilities and owners' equity. 
D) increase assets and decrease owners' equity.

Question 5

Which one of the following events does not have any impact on total working capital?

Accepted Answer

A) A cash dividend to be paid next month is declared. 
B) Warranty expense is accrued. 
C) Salaries previously accrued are paid. 
D) Debt which was previously long-term matures next year. 
A) A cash dividend to be paid next month is declared. 
B) Warranty expense is accrued. 
C) Salaries previously accrued are paid. 
D) Debt which was previously long-term matures next year.

Question 6

On December 31, 2017, Seminole Co. had current assets of $25,000 in cash and current liabilities of $8,000 in accounts payable, resulting in a current ratio of 3.13. The company estimates that warranty expense for 2017 is 6% of sales that totaled $200,000. Calculate Seminole's current ratio after warranty expense is recognized.

Accepted Answer

Warranty Liability of $12,000 ($200,000

Question 7

On December 31, 2017, Carlson Incorporated had total liabilities of $60,000 and total shareholders' equity of $100,000, resulting in a debt/equity ratio of 0.60 before warranty expense is recognized. On December 31, 2017, Carlson estimated warranty expense to be 5% of sales of $100,000. What is Carlson's debt/equity ratio after the warranty expense and related liability is recognized?

Accepted Answer

Warranty expense of $5,000 dec

Question 8

Pacific Company estimates warranty expense as 10% of sales. On January 1, the warranty liability was $10,000. During the year, Pacific paid $8,000 to meet its warranty obligations and recorded sales of $300,000. Calculate the warranty liability on December 31.

Accepted Answer

$10,000 +

Question 9

What impact have environmental cleanup costs had on corporate disclosures?

Accepted Answer

The U.S. government established a fund t

Question 10

Warranties should be accrued if it is

Accepted Answer

A) probable that an expense has been incurred and the amount is reasonably estimable. 
B) possible that an expense has been incurred regardless of whether the amount is estimable or not. 
C) possible that an expense will be incurred and the amount is reasonably estimable. 
D) remote that any expense has been incurred. 
A) probable that an expense has been incurred and the amount is reasonably estimable. 
B) possible that an expense has been incurred regardless of whether the amount is estimable or not. 
C) possible that an expense will be incurred and the amount is reasonably estimable. 
D) remote that any expense has been incurred.

Question 11

The following information was taken from the annual report of Jones Inc.
$$\begin{array} { | l | l | c | } 
\hline & 2017 & \mathbf { 2 0 1 6 } \
\hline \text { BALANCE SHEET } & & \
\hline \text { Deferred incame tax liability } & \$ 29,700 & \$ 28,300 \
\hline & & \
\hline \text { INCOME STATEMENT } & & \
\hline \text { Incame befare taxes } & \$ 89,000 & \
\hline \text { Incame tax expense } & \mathbf {( 3 0 , 4 0 0 ) } & \
\hline \text { Net incame } & \$ 57,600 & \
\hline \text { Effective incame tax rate 40\% } & & \
\hline
\end{array}$$
What is Jones's conservatism ratio?

Accepted Answer

A) 1.02 
B) 1.52 
C) 2.89 
D) 1.21 
A) 1.02 
B) 1.52 
C) 2.89 
D) 1.21

Question 12

Gain contingencies

Accepted Answer

A) should be accrued when probable and the amount can be reasonably estimated. 
B) are reported as revenues on the income statement. 
C) should be accrued for anticipated lottery winnings. 
D) are almost never accrued and are rarely disclosed. 
A) should be accrued when probable and the amount can be reasonably estimated. 
B) are reported as revenues on the income statement. 
C) should be accrued for anticipated lottery winnings. 
D) are almost never accrued and are rarely disclosed.

Question 13

The economic essence of one of the following should not be reported in the balance sheet as a current liability. Which one is not reported?

Accepted Answer

A) Free sandwich offers printed on hockey ticket stubs 
B) Amounts sued for damages associated with injuries from an allegedly defective weed eater 
C) Mail-in rebates from software by software companies 
D) Amounts payable to an employee for a recent expense report 
A) Free sandwich offers printed on hockey ticket stubs 
B) Amounts sued for damages associated with injuries from an allegedly defective weed eater 
C) Mail-in rebates from software by software companies 
D) Amounts payable to an employee for a recent expense report

Question 14

If a loss contingency related to a lawsuit against a firm is deemed to have a reasonable probability of requiring ultimate payment, then the proper accounting treatment of the loss contingency will

Accepted Answer

A) require note disclosure. 
B) decrease the debt/asset ratio. 
C) increase the accounts payable/sales ratio. 
D) decrease the debt/equity ratio. 
A) require note disclosure. 
B) decrease the debt/asset ratio. 
C) increase the accounts payable/sales ratio. 
D) decrease the debt/equity ratio.

Question 15

An income tax accrual at yearend will most likely

Accepted Answer

A) decrease earnings per share. 
B) decrease the debt/asset ratio. 
C) decrease the debt/equity ratio. 
D) be a contingency. 
A) decrease earnings per share. 
B) decrease the debt/asset ratio. 
C) decrease the debt/equity ratio. 
D) be a contingency.

Question 16

Alpine, Inc. sells baseball tickets for professional baseball games. Cash receipts for baseball tickets are credited to Unearned Ticket Revenue. During 2017, Alpine collected $30,000 for a September, 2017 baseball game and $42,000 for a March, 2018 baseball game. The September game was played as scheduled, although $2,000 of tickets was refunded to fans that canceled because they had been permanently kicked out of the stadium for disorderly conduct. How much should be reported as Unearned Ticket Revenue at December 31, 2017?

Accepted Answer

A) $0 
B) $42,000 
C) $72,000 
D) $40,000 
A) $0 
B) $42,000 
C) $72,000 
D) $40,000

Question 17

Ranch Company estimates warranty expense as 5% of sales. On January 1, warranties payable was $13,000. During the year Ranch paid $5,000 to meet its warranty obligations and recorded sales of $120,000. The December 31 liability for the warranty is

Accepted Answer

A) $10,000. 
B) $12,000. 
C) $6,000. 
D) $14,000. 
A) $10,000. 
B) $12,000. 
C) $6,000. 
D) $14,000.

Question 18

What concerns might exist when a company's debt ratio increases?

Accepted Answer

A debt ratio is calculated by dividing t

Question 19

Pension expense is

Accepted Answer

A) accrued each period as employees require payments. 
B) recognized as a long-term deferred asset. 
C) accrued as employees earn their rights to future benefits. 
D) calculated by dividing an employee's annual salary into the number of years the employee is expected to require pension payments. 
A) accrued each period as employees require payments. 
B) recognized as a long-term deferred asset. 
C) accrued as employees earn their rights to future benefits. 
D) calculated by dividing an employee's annual salary into the number of years the employee is expected to require pension payments.

Question 20

On October 1, 2017, Brooks Company borrowed $6,000 in return for a nine-month note payable with a maturity value of $6,600. Fill in the partial balance sheet that appears below as of December 31, 2017.
 $\underline{\text { Current Liabilities} }$

Accepted Answer

None

Which one of the following transactions decreases a company's quick assets?

Liabilities are

Net worth is

Sweeney, Inc. borrowed $30,000 from the bank by signing a 9-month note payable. The proper accounting treatment of recording the note will

Which one of the following events does not have any impact on total working capital?

Pacific Company estimates warranty expense as 10% of sales. On January 1, the warranty liability was $10,000. During the year, Pacific paid $8,000 to meet its warranty obligations and recorded sales of $300,000. Calculate the warranty liability on December 31.

What impact have environmental cleanup costs had on corporate disclosures?

Warranties should be accrued if it is

The following information was taken from the annual report of Jones Inc. 2017 BALANCE SHEET Deferred incame tax liability \ 29,700 \ 28,300 INCOME STATEMENT Incame befare taxes \ 89,000 Incame tax expense Net incame \ 57,600 Effective incame tax rate 40\% What is Jones's conservatism ratio?

Gain contingencies

The economic essence of one of the following should not be reported in the balance sheet as a current liability. Which one is not reported?

If a loss contingency related to a lawsuit against a firm is deemed to have a reasonable probability of requiring ultimate payment, then the proper accounting treatment of the loss contingency will

An income tax accrual at yearend will most likely

Ranch Company estimates warranty expense as 5% of sales. On January 1, warranties payable was $13,000. During the year Ranch paid $5,000 to meet its warranty obligations and recorded sales of $120,000. The December 31 liability for the warranty is

What concerns might exist when a company's debt ratio increases?

Pension expense is

On October 1, 2017, Brooks Company borrowed $6,000 in return for a nine-month note payable with a maturity value of $6,600. Fill in the partial balance sheet that appears below as of December 31, 2017. $\underline{\text { Current Liabilities} }$

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Measurement Fundamentals of Financial Accounting

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

Filters

Exam 10: Introduction to Liabilities: Economic Consequences, Current Liabilities, and Contingencies

Which one of the following transactions decreases a company's quick assets?

Liabilities are

Net worth is

Sweeney, Inc. borrowed $30,000 from the bank by signing a 9-month note payable. The proper accounting treatment of recording the note will

Which one of the following events does not have any impact on total working capital?

Pacific Company estimates warranty expense as 10% of sales. On January 1, the warranty liability was $10,000. During the year, Pacific paid $8,000 to meet its warranty obligations and recorded sales of $300,000. Calculate the warranty liability on December 31.

What impact have environmental cleanup costs had on corporate disclosures?

Warranties should be accrued if it is

The following information was taken from the annual report of Jones Inc. 2017 BALANCE SHEET Deferred incame tax liability \ 29,700 \ 28,300 INCOME STATEMENT Incame befare taxes \ 89,000 Incame tax expense Net incame \ 57,600 Effective incame tax rate 40\% What is Jones's conservatism ratio?

Gain contingencies

The economic essence of one of the following should not be reported in the balance sheet as a current liability. Which one is not reported?

If a loss contingency related to a lawsuit against a firm is deemed to have a reasonable probability of requiring ultimate payment, then the proper accounting treatment of the loss contingency will

An income tax accrual at yearend will most likely

Ranch Company estimates warranty expense as 5% of sales. On January 1, warranties payable was $13,000. During the year Ranch paid $5,000 to meet its warranty obligations and recorded sales of $120,000. The December 31 liability for the warranty is

What concerns might exist when a company's debt ratio increases?

Pension expense is

On October 1, 2017, Brooks Company borrowed $6,000 in return for a nine-month note payable with a maturity value of $6,600. Fill in the partial balance sheet that appears below as of December 31, 2017. Current Liabilities‾\underline{\text { Current Liabilities} } Current Liabilities​

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Measurement Fundamentals of Financial Accounting

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

Filters

On October 1, 2017, Brooks Company borrowed $6,000 in return for a nine-month note payable with a maturity value of $6,600. Fill in the partial balance sheet that appears below as of December 31, 2017. $\underline{\text { Current Liabilities} }$