Question 1

All of the following are characteristics of current liabilities except:

Accepted Answer

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

Question 2

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

Question 3

If a bank discounts a note, then the borrower needs to only pay the cash received and not the face value of the note.

Accepted Answer

A) True 
 B)False  False

Question 4

Interest payable on a loan becomes a liability:

Accepted Answer

A)  at the maturity date. 
B)  when the borrowed money is received. 
C)  as it accrues. 
D)  when the note payable is issued. 
A)  at the maturity date. 
B)  when the borrowed money is received. 
C)  as it accrues. 
D)  when the note payable is issued.

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 student was looking in the wrong column; the second amount should be 1.611/2. 
B)  the more often the compounding, the higher the future value. 
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 student was looking in the wrong column; the second amount should be 1.611/2. 
B)  the more often the compounding, the higher the future value. 
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

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 7

Current liabilities are defined as those liabilities which will be satisfied

Accepted Answer

A)  within one year or within the operating cycle, whichever is shorter. 
B)  by the end of the operating cycle. 
C)  within one year. 
D)  within one year or within the operating cycle, whichever is longer. 
A)  within one year or within the operating cycle, whichever is shorter. 
B)  by the end of the operating cycle. 
C)  within one year. 
D)  within one year or within the operating cycle, whichever is longer.

Question 8

From the following list, identify whether the change in the account balance during the year would be reported as an operating O, an investing I, or a financing F activity or not separately reported on the statement of cash flows N. Assume that the indirect method is used to determine the cash flows from operating activities.
-Notes payable

Accepted Answer

A) O - Operating 
B) I - Investing 
C) F - Financing 
D) N - Not separately reported on the Statement of Cash Flows 
A) O - Operating 
B) I - Investing 
C) F - Financing 
D) N - Not separately reported on the Statement of Cash Flows

Question 9

If a 12% interest rate is compounded quarterly for 3 years, then there would be ________________
compounding periods.

Accepted Answer

The answer of If a 12% interest rate is compounded...

Question 10

Generally, an increase in a current liability results in an increase in the operating activities category of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 11

Assume that you know the total dollar amount of a loan and the amount of the monthly payments. How can you determine the interest rate as a percentage of the loan?

Accepted Answer

The interest rate of the loan could be c

Question 12

Match each of the following terms pertaining to liabilities to their definitions.
-A contra-liability account that represents interest deducted from a loan or note in advance.

Accepted Answer

A) Current liability 
B) Accounts payable 
C) Notes payable 
D) Discount on notes payable 
E) Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability 
A) Current liability 
B) Accounts payable 
C) Notes payable 
D) Discount on notes payable 
E) Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Question 13

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, the adjustment for this note includes:

Accepted Answer

A)  an increase to Notes Payable for $1,600. 
B)  an increase to Interest Payable for $1,600. 
C)  an increase to Interest Expense for $3,200. 
D)  a decrease to Cash for $4,800. 
A)  an increase to Notes Payable for $1,600. 
B)  an increase to Interest Payable for $1,600. 
C)  an increase to Interest Expense for $3,200. 
D)  a decrease to Cash for $4,800.

Question 14

A note payable due in two years is a current liability.

Accepted Answer

A) True 
 B)False

Question 15

At December 31, 2014, an amount due on December 31, 2015, would be classified as an
_______________________ liability.

Accepted Answer

The answer of At December 31, 2014, an amount due...

Question 16

Accountants need not worry about calculations based upon the concept of the time value of money.

Accepted Answer

A) True 
 B)False

Question 17

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, Chancellor Co.'s overall liability for this loan amounts to:

Accepted Answer

A)  $83,200 
B)  $84,800 
C)  $80,000 
D)  $81,600 
A)  $83,200 
B)  $84,800 
C)  $80,000 
D)  $81,600

Question 18

Apply the time value of money in the following independent situations:
1. Margaret Carlson made a deposit in the bank on January 1, 2008. The bank pays interest at the rate of 8% compounded annually. On January 1, 2015, the deposit has accumulated to $40,000. How much money did Margaret originally deposit on January 1, 2008?
2. Claude Cooper deposited $15,600 in the bank on January 1 a few years ago. The bank pays an interest rate of 10% compounded annually, and the deposit is now worth $40,420. For how many years has the deposit been invested?

Accepted Answer

1. $40,000/1.71382 = future value of $1

Question 19

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)  $ 625 
B)  $1,250 
C)  $2,000 
D)  $ 200 
A)  $ 625 
B)  $1,250 
C)  $2,000 
D)  $ 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. A company will have to pay a $50,000 liability in 4 years. How much must be deposited now into a bank account earning 8% compounded semiannually to fully fund the future payment?

Accepted Answer

A)  $35,500 
B)  $36,550 
C)  $36,523 
D)  $34,000 
A)  $35,500 
B)  $36,550 
C)  $36,523 
D)  $34,000

All of the following are characteristics of current liabilities except:

The payment of accounts payable results in an

If a bank discounts a note, then the borrower needs to only pay the cash received and not the face value of the note.

Interest payable on a loan becomes a liability:

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

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

Current liabilities are defined as those liabilities which will be satisfied

If a 12% interest rate is compounded quarterly for 3 years, then there would be ________________ compounding periods.

Generally, an increase in a current liability results in an increase in the operating activities category of the cash flow statement.

Assume that you know the total dollar amount of a loan and the amount of the monthly payments. How can you determine the interest rate as a percentage of the loan?

Match each of the following terms pertaining to liabilities to their definitions. -A contra-liability account that represents interest deducted from a loan or note in advance.

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, the adjustment for this note includes:

A note payable due in two years is a current liability.

At December 31, 2014, an amount due on December 31, 2015, would be classified as an _______________________ liability.

Accountants need not worry about calculations based upon the concept of the time value of money.

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, Chancellor Co.'s overall liability for this loan amounts to:

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

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

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

All of the following are characteristics of current liabilities except:

The payment of accounts payable results in an

If a bank discounts a note, then the borrower needs to only pay the cash received and not the face value of the note.

Interest payable on a loan becomes a liability:

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

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

Current liabilities are defined as those liabilities which will be satisfied

If a 12% interest rate is compounded quarterly for 3 years, then there would be ________________ compounding periods.

Generally, an increase in a current liability results in an increase in the operating activities category of the cash flow statement.

Assume that you know the total dollar amount of a loan and the amount of the monthly payments. How can you determine the interest rate as a percentage of the loan?

Match each of the following terms pertaining to liabilities to their definitions. -A contra-liability account that represents interest deducted from a loan or note in advance.

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, the adjustment for this note includes:

A note payable due in two years is a current liability.

At December 31, 2014, an amount due on December 31, 2015, would be classified as an _______________________ liability.

Accountants need not worry about calculations based upon the concept of the time value of money.

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, Chancellor Co.'s overall liability for this loan amounts to:

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

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