Question 1

A note payable can be used to extend the credit period for an account payable.

Accepted Answer

A) True 
 B)False  True

Question 2

During 2017, Smith Electronics sold 250 microwaves each at $950 per unit. Eachmicrowave has one year warranty. In Smith estimate, it will cost them $62 per unit, if a unit is brought in under warranty for repair. During 2017, Smith spent $12,500 onwarranty costs for the appliances sold in 2017. At the end of the 2017 the warranty liability and the warranty expense related to these sales would be:

Accepted Answer

A)  Warranty liability: 15,500; Warranty expense: 15,500 
B)  Warranty liability: 12,500; Warranty expense: 12,500 
C)  Warranty liability: 3.000; Warranty expense: 12,500 
D)  Warranty liability: 3,000; Warranty expense: 15,500 
A)  Warranty liability: 15,500; Warranty expense: 15,500 
B)  Warranty liability: 12,500; Warranty expense: 12,500 
C)  Warranty liability: 3.000; Warranty expense: 12,500 
D)  Warranty liability: 3,000; Warranty expense: 15,500 D

Question 3

Unearned revenue is another name for sales revenue.

Accepted Answer

A) True 
 B)False  False

Question 4

On December 31, 2015, Peligrino Co. has a long term note payable of $800,000. Of that balance, $100,000 will be paid within one year from the balance sheet date. How much of the note payable should Peligrino Co. report as a non-current liability when theyprepare the December 31, 2015 balance sheet?

Accepted Answer

A)  $800,000. 
B)  $900,000. 
C)  $1,000,000. 
D)  $700,000. 
E)  Nothing. Disclose in a note to the financial statements. 
A)  $800,000. 
B)  $900,000. 
C)  $1,000,000. 
D)  $700,000. 
E)  Nothing. Disclose in a note to the financial statements.

Question 5

A short-term note payable:

Accepted Answer

A)  Is not recorded until it is repaid. 
B)  Is a written promise to pay a specified amount. 
C)  Usually does not bear interest. 
D)  Is a contingent liability. 
E)  Is an estimated liability. 
A)  Is not recorded until it is repaid. 
B)  Is a written promise to pay a specified amount. 
C)  Usually does not bear interest. 
D)  Is a contingent liability. 
E)  Is an estimated liability.

Question 6

The relevance principle requires that contingent assets be recorded.

Accepted Answer

A) True 
 B)False

Question 7

A pending lawsuit is an example of a contingent liability.

Accepted Answer

A) True 
 B)False

Question 8

A warranty is a contingent liability.

Accepted Answer

A) True 
 B)False

Question 9

Employee vacation benefits:

Accepted Answer

A)  Are estimated liabilities. 
B)  Are not recorded until the employee leaves. 
C)  Are contingent liabilities. 
D)  Are not required by law. 
E)  Become an expense when the employee takes a vacation. 
A)  Are estimated liabilities. 
B)  Are not recorded until the employee leaves. 
C)  Are contingent liabilities. 
D)  Are not required by law. 
E)  Become an expense when the employee takes a vacation.

Question 10

West Coast Outdoor Co. sold $22,000 worth of trampolines with a one year warranty. The company estimates that 2% of the sales will result in warranty work. West Coast Outdoor Co. should:

Accepted Answer

A)  Recognize warranty liability at the time of sale. 
B)  Recognize warranty expense at the time warranty work is performed and warranty liability at the time of sale. 
C)  Recognize warranty expense at the time of sale. 
D)  Recognize warranty expense at the time warranty work is performed. 
E)  Recognize warranty expense and warranty liability at the time of sale. 
A)  Recognize warranty liability at the time of sale. 
B)  Recognize warranty expense at the time warranty work is performed and warranty liability at the time of sale. 
C)  Recognize warranty expense at the time of sale. 
D)  Recognize warranty expense at the time warranty work is performed. 
E)  Recognize warranty expense and warranty liability at the time of sale.

Question 11

A combined GST and PST rate of 12% applied to taxable supplies is called:

Accepted Answer

A)  Combined Sales Tax. 
B)  Harmonized Sales Tax. 
C)  Input Tax Credit. 
D)  Zero-rated tax. 
E)  None of these answers is correct. 
A)  Combined Sales Tax. 
B)  Harmonized Sales Tax. 
C)  Input Tax Credit. 
D)  Zero-rated tax. 
E)  None of these answers is correct.

Question 12

A gift card is an example of a contingent liability.

Accepted Answer

A) True 
 B)False

Question 13

Estimated liabilities are also referred to as provisions.

Accepted Answer

A) True 
 B)False

Question 14

An estimated liability is a known obligation of an uncertain amount that can be reasonably estimated.

Accepted Answer

A) True 
 B)False

Question 15

A contingent liability exists when a potential liability that depends on a future event arising out of a past transaction liability is either not probable or it cannot be reliably estimated.

Accepted Answer

A) True 
 B)False

Question 16

An estimated liability:

Accepted Answer

A)  Can be the result of a lawsuit. 
B)  Is a liability that may occur if a future event occurs. 
C)  Is an unknown liability of a certain amount. 
D)  Is a known obligation of an uncertain amount. 
E)  None of these answers is correct. 
A)  Can be the result of a lawsuit. 
B)  Is a liability that may occur if a future event occurs. 
C)  Is an unknown liability of a certain amount. 
D)  Is a known obligation of an uncertain amount. 
E)  None of these answers is correct.

Question 17

At their fiscal year end, Lorax Corp has an unadjusted) $62,000 credit balance in their Income Tax Payable account. However, a review reveals that the actual liability is$70,000. Lorax Corp should prepare an adjusting entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

Accepted Answer

A) True 
 B)False

Question 18

Long-term liabilities:

Accepted Answer

A)  Are sometimes reported on the income statement. 
B)  Are obligations requiring payment within one year or less. 
C)  Are obligations of a company not requiring payment within one year. 
D)  Are not recorded until they are paid. 
E)  Are liabilities arising from future events. 
A)  Are sometimes reported on the income statement. 
B)  Are obligations requiring payment within one year or less. 
C)  Are obligations of a company not requiring payment within one year. 
D)  Are not recorded until they are paid. 
E)  Are liabilities arising from future events.

Question 19

Estimated liabilities include employee health benefits, property taxes, and warranties.

Accepted Answer

A) True 
 B)False

Question 20

A long-term liability can have a current component.

Accepted Answer

A) True 
 B)False

A note payable can be used to extend the credit period for an account payable.

Unearned revenue is another name for sales revenue.

On December 31, 2015, Peligrino Co. has a long term note payable of $800,000. Of that balance, $100,000 will be paid within one year from the balance sheet date. How much of the note payable should Peligrino Co. report as a non-current liability when theyprepare the December 31, 2015 balance sheet?

A short-term note payable:

The relevance principle requires that contingent assets be recorded.

A pending lawsuit is an example of a contingent liability.

A warranty is a contingent liability.

Employee vacation benefits:

West Coast Outdoor Co. sold $22,000 worth of trampolines with a one year warranty. The company estimates that 2% of the sales will result in warranty work. West Coast Outdoor Co. should:

A combined GST and PST rate of 12% applied to taxable supplies is called:

A gift card is an example of a contingent liability.

Estimated liabilities are also referred to as provisions.

An estimated liability is a known obligation of an uncertain amount that can be reasonably estimated.

A contingent liability exists when a potential liability that depends on a future event arising out of a past transaction liability is either not probable or it cannot be reliably estimated.

An estimated liability:

Long-term liabilities:

Estimated liabilities include employee health benefits, property taxes, and warranties.

A long-term liability can have a current component.

Property, Plant and Equipment and Intangibles

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

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Exam 10: Current Liabilities

A note payable can be used to extend the credit period for an account payable.

Unearned revenue is another name for sales revenue.

On December 31, 2015, Peligrino Co. has a long term note payable of $800,000. Of that balance, $100,000 will be paid within one year from the balance sheet date. How much of the note payable should Peligrino Co. report as a non-current liability when theyprepare the December 31, 2015 balance sheet?

A short-term note payable:

The relevance principle requires that contingent assets be recorded.

A pending lawsuit is an example of a contingent liability.

A warranty is a contingent liability.

Employee vacation benefits:

West Coast Outdoor Co. sold $22,000 worth of trampolines with a one year warranty. The company estimates that 2% of the sales will result in warranty work. West Coast Outdoor Co. should:

A combined GST and PST rate of 12% applied to taxable supplies is called:

A gift card is an example of a contingent liability.

Estimated liabilities are also referred to as provisions.

An estimated liability is a known obligation of an uncertain amount that can be reasonably estimated.

A contingent liability exists when a potential liability that depends on a future event arising out of a past transaction liability is either not probable or it cannot be reliably estimated.

An estimated liability:

Long-term liabilities:

Estimated liabilities include employee health benefits, property taxes, and warranties.

A long-term liability can have a current component.

Property, Plant and Equipment and Intangibles

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters