Question 1

A reciprocal relationship exists between the "future value of $1" and the "present value of $1."

Accepted Answer

A) True 
 B)False  True

Question 2

A contingent liability is recorded in the accounting records

Accepted Answer

A)  if a reasonable estimate of the expected loss can be determined and if it is probable. 
B)  if the contingency has not already been disclosed in the notes to the ﬁnancial statements. 
C)  if it will possibly become an actual liability, and the exact amount is unknown. 
D)  under no circumstances. 
A)  if a reasonable estimate of the expected loss can be determined and if it is probable. 
B)  if the contingency has not already been disclosed in the notes to the ﬁnancial statements. 
C)  if it will possibly become an actual liability, and the exact amount is unknown. 
D)  under no circumstances. A

Question 3

Present value can be defined as which of the following?

Accepted Answer

A)  Future amount of a sum of money held now. 
B)  Value today of future cash inflow(s). 
C)  Maturity value of a debt. 
D)  Sum of cash in?ows over a future period of time. 
A)  Future amount of a sum of money held now. 
B)  Value today of future cash inflow(s). 
C)  Maturity value of a debt. 
D)  Sum of cash in?ows over a future period of time. B

Question 4

The Canada Pension Plan contribution is a matching contribution with a portion paid by both the employer and the employee.

Accepted Answer

A) True 
 B)False

Question 5

In 20X3, P Co reported a trade payables turnover ratio of 2.49 and C Co reported a turnover ratio of 1.74 for that same year. Which of the following statements is true?

Accepted Answer

A)  C Co pays their vendors in a timelier manner than P Co pays their vendors. 
B)  On a comparative basis to cost sales, P Co carries more in average payables than does C Co. 
C)  It is unclear if P Co pays their vendors in a timelier manner than C Co. 
D)  P Co took approximately 147 days while C Co took about 210 days to pay vendors. 
A)  C Co pays their vendors in a timelier manner than P Co pays their vendors. 
B)  On a comparative basis to cost sales, P Co carries more in average payables than does C Co. 
C)  It is unclear if P Co pays their vendors in a timelier manner than C Co. 
D)  P Co took approximately 147 days while C Co took about 210 days to pay vendors.

Question 6

Which of the following is not a typical current liability?

Accepted Answer

A)  Sales taxes payable 
B)  Bonds payable 
C)  Deferred revenue 
D)  Income tax payable 
A)  Sales taxes payable 
B)  Bonds payable 
C)  Deferred revenue 
D)  Income tax payable

Question 7

Notes payable are sometimes used instead of trade payables.

Accepted Answer

A) True 
 B)False

Question 8

Shirlen Company has the following partial list of account balances at year end: $$\begin{array} { | l | r | } 
\hline \text { Trade payables } & \$ 500 \
\hline \text { Trade receivables } & 1,600 \
\hline \text { Bonds payable (due in 5 years) } & 80,000 \
\hline \text { Cash } & 2,000 \
\hline \text { Equipment (net) } & 5,000 \
\hline \text { Land } & 9,900 \
\hline \text { Notes payable (due in 6 months) } & 800 \
\hline \text { Salaries payable } & 700 \
\hline \text { Cost of Goods Sold } & 5,000 \
\hline
\end{array}$$ Required: 
A. Determine the amount of working capital.
B. Assume that cash is used to pay the balance due on trade payables. Compute the new amount of working capital.
C. Compute the trade payables turnover ratio .

Accepted Answer

A.Working capital = $3,600 - 2,000 = $1,

Question 9

Interest expense is reported under Other Expenses in the statement of earnings.

Accepted Answer

A) True 
 B)False

Question 10

Changes in trade payables and accrued liabilities affect cash ﬂows from operating activities.

Accepted Answer

A) True 
 B)False

Question 11

Warner Company borrowed $38,000 on a 12% one-year, interest bearing note dated November 1, 20X0. The annual accounting period ends on December 31. Give journal entries on the following dates:
A. November 1, 20X0
B. December 31, 20X0
C. October 31, 20X1

Accepted Answer

A. \[\begin{array} { | l | r | r | } 
\h

Question 12

Future income tax obligations should be reported on which of the following?

Accepted Answer

A)  A corporation's income tax return. 
B)  A corporation's statement of ﬁnancial position. 
C)  A corporation's income statement. 
D)  Statement of changes in equity. 
A)  A corporation's income tax return. 
B)  A corporation's statement of ﬁnancial position. 
C)  A corporation's income statement. 
D)  Statement of changes in equity.

Question 13

Which of the following method of ordering is normally used to present current liabilities on the statement of ﬁnancial position?

Accepted Answer

A)  In order of their magnitude 
B)  In order of their liquidity (due date) 
C)  In alphabetical order 
D)  In order of reverse liquidity 
A)  In order of their magnitude 
B)  In order of their liquidity (due date) 
C)  In alphabetical order 
D)  In order of reverse liquidity

Question 14

How much would Kristen have to deposit in the bank today if she will be earning a 6% annual rate of return and wants to have $5,000 in the bank at the end of five years? (Round to the nearest dollar).

Accepted Answer

A)  $3,736 
B)  $4,212 
C)  $4,737 
D)  $5,637 
A)  $3,736 
B)  $4,212 
C)  $4,737 
D)  $5,637

Question 15

The following table values are provided for use in solving the following independent problems (show computations): n = 5 $$\begin{array} { | l | r | r | r | } 
\hline \text { Value } & 6 \% & 7 \% & 8 \% \
\hline \text { Future value of } \$ 1 & 1.3382 & 1.4026 & 1.4693 \
\hline \text { Present value of } \$ 1 & .7473 & .7130 & .6806 \
\hline \text { Future value of annuity of } \$ 1 & 5.6371 & 5.7507 & 5.8666 \
\hline \text { Present value of } \$ 1 ^ { * } & 4.2124 & 4.1002 & 3.9927 \
\hline
\end{array}$$ *Ordinary annuity 
A. Company A deposited $20,000 in a savings account on January 1, 20X1 that will accumulate 6% interest each December 21. 1. What will be the fund balance at the end of Year 5 2. How much interest will be earned by the end of Y ear 5?
B. Company B needs to accumulate a $50,000 fund by making five equal annual deposits. Assuming a 7% interest accumulation, how much must be deposited at the end of the year?
C. Company C has new machine that has an estimated life of five years and a $5,000 residual value. Assuming an 8% interest rate, what is the present value of the estimated residual value?
D. Company D owes a $50,000 debt that is now due (January 1, 20X1). Arrangements have been made to pay it off in five equal annual installments, starting December 31, 20X1 (an ordinary annuity situation). 
1. Assuming 8% interest, how much will the annual payment be? 
2. Give the entry for Company D above for the first payment on December 31, 20X1 on the note payable.

Accepted Answer

A.1. $20,000 × 2.3382 (Fn = 5:1; I = 6%)

Question 16

The federal government requires which of the following?

Accepted Answer

A)  Only the employer to pay CPP contributions. 
B)  Only the employee to pay CPP contributions. 
C)  Neither the employer nor the employee to pay CPP contributions. 
D)  Both the employer and the employee to pay CPP contributions. 
A)  Only the employer to pay CPP contributions. 
B)  Only the employee to pay CPP contributions. 
C)  Neither the employer nor the employee to pay CPP contributions. 
D)  Both the employer and the employee to pay CPP contributions.

Question 17

Most notes are not interest bearing.

Accepted Answer

A) True 
 B)False

Question 18

The present value of an annuity is determined only from the interest (discount) rate and the periodic payment amount.

Accepted Answer

A) True 
 B)False

Question 19

Most companies pay current liabilities

Accepted Answer

A)  out of current assets. 
B)  by issuing interest-bearing notes payable. 
C)  by issuing shares. 
D)  by creating long-term liabilities. 
A)  out of current assets. 
B)  by issuing interest-bearing notes payable. 
C)  by issuing shares. 
D)  by creating long-term liabilities.

Question 20

In the recognition of revenues and expenses, temporary and permanent differences between the ﬁnancial statements and the tax return will result in a Future Income Tax Asset.

Accepted Answer

A) True 
 B)False

A reciprocal relationship exists between the "future value of $1" and the "present value of $1."

A contingent liability is recorded in the accounting records

Present value can be defined as which of the following?

The Canada Pension Plan contribution is a matching contribution with a portion paid by both the employer and the employee.

In 20X3, P Co reported a trade payables turnover ratio of 2.49 and C Co reported a turnover ratio of 1.74 for that same year. Which of the following statements is true?

Which of the following is not a typical current liability?

Notes payable are sometimes used instead of trade payables.

Interest expense is reported under Other Expenses in the statement of earnings.

Changes in trade payables and accrued liabilities affect cash ﬂows from operating activities.

Warner Company borrowed $38,000 on a 12% one-year, interest bearing note dated November 1, 20X0. The annual accounting period ends on December 31. Give journal entries on the following dates: A. November 1, 20X0 B. December 31, 20X0 C. October 31, 20X1

Future income tax obligations should be reported on which of the following?

Which of the following method of ordering is normally used to present current liabilities on the statement of ﬁnancial position?

How much would Kristen have to deposit in the bank today if she will be earning a 6% annual rate of return and wants to have $5,000 in the bank at the end of five years? (Round to the nearest dollar).

The federal government requires which of the following?

Most notes are not interest bearing.

The present value of an annuity is determined only from the interest (discount) rate and the periodic payment amount.

Most companies pay current liabilities

In the recognition of revenues and expenses, temporary and permanent differences between the ﬁnancial statements and the tax return will result in a Future Income Tax Asset.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Fraud, Internal Control, and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

A reciprocal relationship exists between the "future value of $1" and the "present value of $1."

A contingent liability is recorded in the accounting records

Present value can be defined as which of the following?

The Canada Pension Plan contribution is a matching contribution with a portion paid by both the employer and the employee.

In 20X3, P Co reported a trade payables turnover ratio of 2.49 and C Co reported a turnover ratio of 1.74 for that same year. Which of the following statements is true?

Which of the following is not a typical current liability?

Notes payable are sometimes used instead of trade payables.

Interest expense is reported under Other Expenses in the statement of earnings.

Changes in trade payables and accrued liabilities affect cash ﬂows from operating activities.

Warner Company borrowed $38,000 on a 12% one-year, interest bearing note dated November 1, 20X0. The annual accounting period ends on December 31. Give journal entries on the following dates: A. November 1, 20X0 B. December 31, 20X0 C. October 31, 20X1

Future income tax obligations should be reported on which of the following?

Which of the following method of ordering is normally used to present current liabilities on the statement of ﬁnancial position?

How much would Kristen have to deposit in the bank today if she will be earning a 6% annual rate of return and wants to have $5,000 in the bank at the end of five years? (Round to the nearest dollar).

The federal government requires which of the following?

Most notes are not interest bearing.

The present value of an annuity is determined only from the interest (discount) rate and the periodic payment amount.

Most companies pay current liabilities

In the recognition of revenues and expenses, temporary and permanent differences between the ﬁnancial statements and the tax return will result in a Future Income Tax Asset.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Fraud, Internal Control, and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters