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

Long-term assets are $5,000, current liabilities are $700, and long-term liabilities are $3,000. If the current ratio is 3 to 1, then current assets are

If the present and future values are known along with the number of periods, then the _________________________ can be determined.

Auto Designs, Inc. Use the selected data from the comparative financial statements for Auto Designs, Inc. to answer the questions that follow. -Refer to the account information for Auto Designs, Inc. REQUIRED: Compute the total current liabilities for the years 2015 and 2014. Calculate the percentage change in the total current liabilities.

The issue price of a bond is based on the of the cash flows that the bond will produce.

Marsh Corporation borrowed $90,000 by issuing a 12%, six-month note payable, all due at the maturity date. After one month, the company's total liability for this loan amounts to:

Interest that is earned or paid on the principal amount only.

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. -Accounts payable

Boston Trombley Company is a defendant in a lawsuit alleging damages of $3 billion. It is probable that Boston Trombley will lose the suit. The litigation is anticipated to continue for several years, but no reasonable estimate can be made at this time regarding ultimate financial responsibility. This situation is an example of:

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2014 balance sheet. -An amount of money owed to a creditor on a note due August 15, 2022.

There are very important differences between U.S. and international standards regarding contingencies. Even the terms used to refer to situations with unknown outcomes differ. Explain these differences.

Grain Company sells a product for $760. When the customer buys it, Grain provides a one-year warranty. Grain sold 1,500 products during 2015. Based on analysis of past warranty records, Grain estimates that repairs will average 6% of total sales. REQUIRED: 1. Identify the accounting equation effects for the transaction of the estimated liability. 2. Assume that during 2015, products under warranty must be repaired using repair parts from inventory costing $49,600. Identify the accounting equation effects for the transaction to repair products. 3. Assume that the balance of the Estimated Liabilities for Warranties account as of the beginning of 2015 was $1,700. Calculate the balance of the account as of the end of 2015.

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 you must calculate the present value of an amount at 8% compounded quarterly for 2 years, then the interest factor used in the calculation is

include any amount that has been incurred due to the passage of time, but not paid as of the balance sheet date.

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 the interest factor used to calculate the future value of $1 at 6% for 5 periods is 1.338, then the present value of $1 at 6% for 5 periods is

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. The future value of $6,000 at 12% compounded quarterly for 5 years is

A bank loaned York Construction Company $35,000 on a 1-year, 6% note, but deducted the interest in advance. The transaction recorded on York's books for the receipt of the cash would include an

What are examples of accounts that might be classified as accrued liabilities in the current liabilities section of the balance sheet?

Cole Company had the following accounts and balances on December 31, 2015: REQUIRED: 1. Compute Cole's working capital. 2. Compute Cole's current ratio. What does this ratio indicate about Cole's condition?

Match each of the following terms pertaining to liabilities to their definitions. -Amounts owed that are represented by a formal contractual agreement. These amounts usually require the payment of interest.

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?