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

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

On November 1, 2016, Brownsville 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, 2016, Brownsville Co.'s overall liability for this loan amounts to:

Almost all current liabilities appear within the ___________________ Activities category of the Statement of Cash Flows.

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.

In the statement of cash flows, a decrease in accounts payable would be shown as an increase in the Operating Activities category.

If the annual interest is 12%, but the compounding is done quarterly, then the interest rate is 4% per period.

Which of the following accounts is not classified as a current liability?

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

The present value is the value today of a single amount to be paid or received at a specific date in the future.

In 2016, Scranton, Inc.sold 2,000 carpets for $50 each.The carpets carry a 2-year warranty for repairs.Scranton estimates that repair costs will average 3% 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 2016?

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed.

A firm is required to estimate a liability for repairs for products sold with a warranty.If the firm's accountants later find that the estimated amount for repairs has been overstated, the correct accounting procedure is to

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

In 2016, Baloga Heating Company sold 400 water heaters for $350 each.The water heaters carry a 2-year warranty for repairs.Baloga estimates that repair costs will average 2% of the total selling price.How much is recorded in the warranty liability account as a result of selling the water heaters during 2016?

Which of the following statements regarding contingencies is true?

Executive, Inc.has a weekly payroll of $10,000 for a 5-day workweek, Monday through Friday.If December 31, the last day of the accounting year, falls on Thursday, Executive would make an adjusting entry that would

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 12% compounded quarterly for 2 years, then the interest factor used in the calculation is

What is the purpose of the current ratio? How does the quick ratio differ from the current ratio?

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:

From the following list, identify whether the change in the account balance during the year would be reported as operating (O) cash flow, investing (I) cash flow, financing (F) cash flow or not separately (N) reported on the statement of cash flows.Assume that the indirect method is used to prepare the operating activities section.Use the following response choices a-d. -Other accrued liabilities