Question 1

The classification of current liabilities is closely tied to the concept of .

Accepted Answer

The answer of The classification of current liabilities is closely...

Question 2

Clarion Inc.issues numerous discount coupons throughout the year.A balance in the Estimated Liability for Coupon Redemption

Accepted Answer

A) indicates an error had been made in posting. 
B) should equal the same amount of coupons redeemed. 
C) is the amount of outstanding coupons it expects to be redeemed. 
D) indicates that more coupons were redeemed than estimated. 
A) indicates an error had been made in posting. 
B) should equal the same amount of coupons redeemed. 
C) is the amount of outstanding coupons it expects to be redeemed. 
D) indicates that more coupons were redeemed than estimated.

Question 3

Assume the current ratio is 3 to 4.Purchases of inventory on account would cause the current ratio to

Accepted Answer

A) increase 
B) decrease 
C) be unchanged since the effects offset each other 
D) be unchanged since it has no effects on any current accounts 
A) increase 
B) decrease 
C) be unchanged since the effects offset each other 
D) be unchanged since it has no effects on any current accounts

Question 4

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Accepted Answer

A) $1,800.00 
B) $1,411.20 
C) $2,154.60 
D) $554.04 
A) $1,800.00 
B) $1,411.20 
C) $2,154.60 
D) $554.04

Question 5

Using the future value table, a student found that the future value amount of $1 for 5 years at an annual interest rate of 10% is 1.611.The student also observed that the future value of $1 for 5 years at 10% compounded semiannually is 1.629.This means that

Accepted Answer

A) the more often the compounding, the higher the future value. 
B) the student was looking in the wrong column; the second amount should be 1.611/2. 
C) there was an error in the table. 
D) when interest is compounded semiannually, more money must be deposited to have a desired ending balance. 
A) the more often the compounding, the higher the future value. 
B) the student was looking in the wrong column; the second amount should be 1.611/2. 
C) there was an error in the table. 
D) when interest is compounded semiannually, more money must be deposited to have a desired ending balance.

Question 6

Estimated liability for product warranties to be paid in the future is a current liability.

Accepted Answer

A) True 
 B)False

Question 7

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

Accepted Answer

A) $1,980 
B) $2,205 
C) $6,600 
D) $7,980 
A) $1,980 
B) $2,205 
C) $6,600 
D) $7,980

Question 8

All of the following are characteristics of current liabilities except:

Accepted Answer

A) They may be replaced with a new short-term liability rather than being paid in cash. 
B) They may involve estimated amounts. 
C) They are due within one year or within the operating cycle, whichever is longer. 
D) All three of the above are characteristic of current liabilities. 
A) They may be replaced with a new short-term liability rather than being paid in cash. 
B) They may involve estimated amounts. 
C) They are due within one year or within the operating cycle, whichever is longer. 
D) All three of the above are characteristic of current liabilities.

Question 9

Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600.If the current ratio is 2.5 to 1, then current assets are

Accepted Answer

A) $ 200 
B) $ 625 
C) $1,250 
D) $2,000 
A) $ 200 
B) $ 625 
C) $1,250 
D) $2,000

Question 10

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
If Garrett has $5,000 per year to invest for 10 years and wants to accumulate $87,745 at the end of that time, he must find an investment that is earning at a rate of

Accepted Answer

A) 15% 
B) 12% 
C) 11% 
D) 6% 
A) 15% 
B) 12% 
C) 11% 
D) 6%

Question 11

The payment of accounts payable results in an)

Accepted Answer

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

Question 12

U.S.standards do not require a classified balance sheet, but International accounting standards require companies to present classified balance sheets with liabilities classified as either current or long term.

Accepted Answer

A) True 
 B)False

Question 13

A bank loaned Darden Company $10,000 on a 1-year, 6% note, but deducted the interest in advance.The journal entry made by Darden to record receipt of the cash would include a

Accepted Answer

A) an increase in Cash for $9,400 
B) an increase in Cash for $600 
C) a decrease in Notes Payable for $10,600 
D) a decrease in Notes Payable for $9,400 
A) an increase in Cash for $9,400 
B) an increase in Cash for $600 
C) a decrease in Notes Payable for $10,600 
D) a decrease in Notes Payable for $9,400

Question 14

All of the following statements are true except:

Accepted Answer

A) The threshold for recording items as liabilities is a lower under IFRS than under U.S.GAAP. 
B) The threshold for recording items as liabilities is a lower under U.S.GAAP than under IFRS. 
C) IFRS requires a liability to be recorded as a present value amount. 
D) Under U.S.GAAP, a contingent item should be recorded as a liability if the loss or outflow is probable and can be reasonably estimated. 
A) The threshold for recording items as liabilities is a lower under IFRS than under U.S.GAAP. 
B) The threshold for recording items as liabilities is a lower under U.S.GAAP than under IFRS. 
C) IFRS requires a liability to be recorded as a present value amount. 
D) Under U.S.GAAP, a contingent item should be recorded as a liability if the loss or outflow is probable and can be reasonably estimated.

Question 15

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
Winston wins the lottery.He wins $20,000 per year to be paid to him for 10 years.The state offers him the choice of a cash settlement now instead of the annual payments for 10 years.If the interest rate is 6%, what is the amount the state will offer for a settlement today?

Accepted Answer

A) $147,200 
B) $154,440 
C) $175,000 
D) $200,000 
A) $147,200 
B) $154,440 
C) $175,000 
D) $200,000

Question 16

Employees earn $5,000 per day, work five days per week, Monday through Friday, and get paid every Friday.If the previous payday was January 26 and the accounting period ends on January 31, what amount is the ending balance in the wages payable account?

Accepted Answer

A) $ 9,000 
B) $10,000 
C) $15,000 
D) $25,000 
A) $ 9,000 
B) $10,000 
C) $15,000 
D) $25,000

Question 17

In 2015, Boone, Inc.sold 1,000 carpets for $50 each.The carpets carry a 2-year warranty for repairs.Boone estimates that repair costs will average 2% of the total selling price.What is the amount that would be recorded in the warranty liability account as a result of selling the carpets during 2015?

Accepted Answer

A) $1,000 
B) $ 500 
C) $ 20 
D) No liability should be recorded until the carpets are returned for repairs. 
A) $1,000 
B) $ 500 
C) $ 20 
D) No liability should be recorded until the carpets are returned for repairs.

Question 18

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

Accepted Answer

A) True 
 B)False

Question 19

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays April 2, then the amount paid to the seller would be

Accepted Answer

A) $3,136 
B) $3,150 
C) $3,168 
D) $3,200 
A) $3,136 
B) $3,150 
C) $3,168 
D) $3,200

Question 20

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
Cory and Ginger want to buy an airplane.They find one that will cost $200,000.They must pay 10% down, and can get the balance financed with a 10 year loan at 7% interest and annual payments.What is their annual payment?

Accepted Answer

A) $26,826 
B) $25,626 
C) $24,457 
D) $19,260 
A) $26,826 
B) $25,626 
C) $24,457 
D) $19,260

The classification of current liabilities is closely tied to the concept of .

Clarion Inc.issues numerous discount coupons throughout the year.A balance in the Estimated Liability for Coupon Redemption

Assume the current ratio is 3 to 4.Purchases of inventory on account would cause the current ratio to

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Using the future value table, a student found that the future value amount of $1 for 5 years at an annual interest rate of 10% is 1.611.The student also observed that the future value of $1 for 5 years at 10% compounded semiannually is 1.629.This means that

Estimated liability for product warranties to be paid in the future is a current liability.

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

All of the following are characteristics of current liabilities except:

Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600.If the current ratio is 2.5 to 1, then current assets are

The payment of accounts payable results in an)

U.S.standards do not require a classified balance sheet, but International accounting standards require companies to present classified balance sheets with liabilities classified as either current or long term.

A bank loaned Darden Company $10,000 on a 1-year, 6% note, but deducted the interest in advance.The journal entry made by Darden to record receipt of the cash would include a

All of the following statements are true except:

Employees earn $5,000 per day, work five days per week, Monday through Friday, and get paid every Friday.If the previous payday was January 26 and the accounting period ends on January 31, what amount is the ending balance in the wages payable account?

In 2015, Boone, Inc.sold 1,000 carpets for $50 each.The carpets carry a 2-year warranty for repairs.Boone estimates that repair costs will average 2% of the total selling price.What is the amount that would be recorded in the warranty liability account as a result of selling the carpets during 2015?

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays April 2, then the amount paid to the seller would be

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 9: Current Liabilities, Contingencies, and the Time Value of Money

The classification of current liabilities is closely tied to the concept of .

Clarion Inc.issues numerous discount coupons throughout the year.A balance in the Estimated Liability for Coupon Redemption

Assume the current ratio is 3 to 4.Purchases of inventory on account would cause the current ratio to

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Using the future value table, a student found that the future value amount of $1 for 5 years at an annual interest rate of 10% is 1.611.The student also observed that the future value of $1 for 5 years at 10% compounded semiannually is 1.629.This means that

Estimated liability for product warranties to be paid in the future is a current liability.

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

All of the following are characteristics of current liabilities except:

Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600.If the current ratio is 2.5 to 1, then current assets are

The payment of accounts payable results in an)

U.S.standards do not require a classified balance sheet, but International accounting standards require companies to present classified balance sheets with liabilities classified as either current or long term.

A bank loaned Darden Company $10,000 on a 1-year, 6% note, but deducted the interest in advance.The journal entry made by Darden to record receipt of the cash would include a

All of the following statements are true except:

Employees earn $5,000 per day, work five days per week, Monday through Friday, and get paid every Friday.If the previous payday was January 26 and the accounting period ends on January 31, what amount is the ending balance in the wages payable account?

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays April 2, then the amount paid to the seller would be

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters