Question 1

The disclosure of a contingent liability in the footnotes and on the Balance Sheet indicates that the potential for the obligation occurring is:

Accepted Answer

A) remote. 
B) possible. 
C) probable. 
D) certain. 
A) remote. 
B) possible. 
C) probable. 
D) certain. C

Question 2

If a bond's stated rate of interest is equal to the market rate of interest, the bond will be issued at:

Accepted Answer

A) a discount. 
B) par. 
C) a premium. 
D) maturity value. 
A) a discount. 
B) par. 
C) a premium. 
D) maturity value. B

Question 3

Many salespersons have part of their payroll determined by a percent of sales. These are called:

Accepted Answer

A) salaries. 
B) wages. 
C) bonuses. 
D) commissions. 
A) salaries. 
B) wages. 
C) bonuses. 
D) commissions. D

Question 4

Which current liability is generally listed first?

Accepted Answer

A) Notes payable 
B) Accounts Payable 
C) Current portions of long-term debt 
D) Accrued payables 
A) Notes payable 
B) Accounts Payable 
C) Current portions of long-term debt 
D) Accrued payables

Question 5

Wolfe Company has a 5-year mortgage for $120,000 which requires 4 equal payments of principal plus interest. In the first year of the mortgage, Wolfe will report this liability as a:

Accepted Answer

A) current liability of $120,000. 
B) long-term liability of $120,000. 
C) current liability of $90,000 and a long-term liability of $30,000. 
D) current liability of $30,000 and a long-term liability of $90,000. 
A) current liability of $120,000. 
B) long-term liability of $120,000. 
C) current liability of $90,000 and a long-term liability of $30,000. 
D) current liability of $30,000 and a long-term liability of $90,000.

Question 6

Which of the following would NOT be considered a contingent liability?

Accepted Answer

A) Pending legal action 
B) Potential fines from the EPA 
C) Mortgage Payable 
D) Cosigning a loan 
A) Pending legal action 
B) Potential fines from the EPA 
C) Mortgage Payable 
D) Cosigning a loan

Question 7

Withheld payroll deductions become:

Accepted Answer

A) assets of the employer. 
B) liabilities of the employer. 
C) revenues of the employer. 
D) liabilities of the employee. 
A) assets of the employer. 
B) liabilities of the employer. 
C) revenues of the employer. 
D) liabilities of the employee.

Question 8

A major difference between Accounts Payable and Notes Payable is that:

Accepted Answer

A) only Accounts Payable are classified as current assets. 
B) Notes Payable are more formal than Accounts Payable. 
C) only Notes Payable charge interest. 
D) Notes Payable are only long-term assets. 
A) only Accounts Payable are classified as current assets. 
B) Notes Payable are more formal than Accounts Payable. 
C) only Notes Payable charge interest. 
D) Notes Payable are only long-term assets.

Question 9

In general it is better to use current liabilities to finance current assets and long-term debt to finance long-term assets.

Accepted Answer

A) True 
 B)False

Question 10

If a $15,000, 8 percent, 20-year bond was issued at 95 on November 1, how much will accrued interest payable be on December 31 if interest payments are made annually? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Accepted Answer

A) $200 
B) $181 
C) $219 
D) $190 
A) $200 
B) $181 
C) $219 
D) $190

Question 11

When sales tax is remitted to the state, the journal entry includes a debit to Cash and a credit to Sales Tax Payable.

Accepted Answer

A) True 
 B)False

Question 12

Vintage Boutique reported Interest expense of $5,500, Income tax expense of $24,000 and Net income of $77,000. Vintage Boutique's interest coverage ratio is: (Round your final answer to two decimal places.)

Accepted Answer

A) 18.36 
B) 0.07 
C) 0.05 
D) 19.36 
A) 18.36 
B) 0.07 
C) 0.05 
D) 19.36

Question 13

On January 1, Clive Corporation signed a $460,000, 6%, 30-year mortgage that requires semiannual payments of $16,621 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be: (Round your final answer to the nearest dollar.)

Accepted Answer

A) debit Interest Expense, $2,821; debit Mortgage Payable, $13,800; credit Cash, $16,621. 
B) debit Interest Expense, $13,800; debit Mortgage Payable, $2,821; credit Cash, $16,621. 
C) debit Mortgage Payable, $16,621; credit Cash, $16,621. 
D) debit Interest Expense, $13,800; debit Mortgage expense, $2,821; credit Cash, $16,621. 
A) debit Interest Expense, $2,821; debit Mortgage Payable, $13,800; credit Cash, $16,621. 
B) debit Interest Expense, $13,800; debit Mortgage Payable, $2,821; credit Cash, $16,621. 
C) debit Mortgage Payable, $16,621; credit Cash, $16,621. 
D) debit Interest Expense, $13,800; debit Mortgage expense, $2,821; credit Cash, $16,621.

Question 14

A mortgage is a secured note because the building will serve as collateral.

Accepted Answer

A) True 
 B)False

Question 15

The journal entry to record the employer's portion of FICA tax includes a:

Accepted Answer

A) debit to salary expense. 
B) debit to payroll tax expense. 
C) debit to FICA tax payable. 
D) debit to benefits expense. 
A) debit to salary expense. 
B) debit to payroll tax expense. 
C) debit to FICA tax payable. 
D) debit to benefits expense.

Question 16

In a(n)_____ lease the lessee will record the lease by debiting an asset account and crediting Lease Payable.

Accepted Answer

A) operating 
B) capital 
C) short-term 
D) long-term 
A) operating 
B) capital 
C) short-term 
D) long-term

Question 17

Which of the following would be considered a contingent liability?

Accepted Answer

A) Federal income tax payable 
B) Warranties payable 
C) Pending litigation 
D) Salaries payable 
A) Federal income tax payable 
B) Warranties payable 
C) Pending litigation 
D) Salaries payable

Question 18

Which of the following would NOT be a liability?

Accepted Answer

A) The signing of a three-year employment contract at a fixed annual salary 
B) An obligation to provide goods or services in the future 
C) A note payable with no specified maturity date 
D) An obligation that is estimated in amount 
A) The signing of a three-year employment contract at a fixed annual salary 
B) An obligation to provide goods or services in the future 
C) A note payable with no specified maturity date 
D) An obligation that is estimated in amount

Question 19

On January 1, Greene Autos signed a $250,000, 6%, 30-year mortgage that requires semiannual payments of $9,033 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

Accepted Answer

A) debit Mortgage Payable, $9,033; credit Cash, $9,033. 
B) debit Interest Expense, $1,533; debit Mortgage Payable, $7,500; credit Cash, $9,033. 
C) debit Interest Expense, $7,500; debit Mortgage expense, $1,533; credit Cash, $9,033. 
D) debit Interest Expense, $7,500; debit Mortgage Payable, $1,533; credit Cash, $9,033. 
A) debit Mortgage Payable, $9,033; credit Cash, $9,033. 
B) debit Interest Expense, $1,533; debit Mortgage Payable, $7,500; credit Cash, $9,033. 
C) debit Interest Expense, $7,500; debit Mortgage expense, $1,533; credit Cash, $9,033. 
D) debit Interest Expense, $7,500; debit Mortgage Payable, $1,533; credit Cash, $9,033.

Question 20

A $9,000 bond issue with a stated interest rate of 9%, when the market rate of interest is 9%, means that the bond will sell for:

Accepted Answer

A) $9,810. 
B) $9,000 
C) more than $9,000. 
D) less than $9,000. 
A) $9,810. 
B) $9,000 
C) more than $9,000. 
D) less than $9,000.

The disclosure of a contingent liability in the footnotes and on the Balance Sheet indicates that the potential for the obligation occurring is:

If a bond's stated rate of interest is equal to the market rate of interest, the bond will be issued at:

Many salespersons have part of their payroll determined by a percent of sales. These are called:

Which current liability is generally listed first?

Wolfe Company has a 5-year mortgage for $120,000 which requires 4 equal payments of principal plus interest. In the first year of the mortgage, Wolfe will report this liability as a:

Which of the following would NOT be considered a contingent liability?

Withheld payroll deductions become:

A major difference between Accounts Payable and Notes Payable is that:

In general it is better to use current liabilities to finance current assets and long-term debt to finance long-term assets.

If a $15,000, 8 percent, 20-year bond was issued at 95 on November 1, how much will accrued interest payable be on December 31 if interest payments are made annually? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

When sales tax is remitted to the state, the journal entry includes a debit to Cash and a credit to Sales Tax Payable.

Vintage Boutique reported Interest expense of $5,500, Income tax expense of $24,000 and Net income of $77,000. Vintage Boutique's interest coverage ratio is: (Round your final answer to two decimal places.)

On January 1, Clive Corporation signed a $460,000, 6%, 30-year mortgage that requires semiannual payments of $16,621 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be: (Round your final answer to the nearest dollar.)

A mortgage is a secured note because the building will serve as collateral.

The journal entry to record the employer's portion of FICA tax includes a:

In a(n)_____ lease the lessee will record the lease by debiting an asset account and crediting Lease Payable.

Which of the following would be considered a contingent liability?

Which of the following would NOT be a liability?

On January 1, Greene Autos signed a $250,000, 6%, 30-year mortgage that requires semiannual payments of $9,033 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

A $9,000 bond issue with a stated interest rate of 9%, when the market rate of interest is 9%, means that the bond will sell for:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 9: Current Liabilities and Long-Term Debt

The disclosure of a contingent liability in the footnotes and on the Balance Sheet indicates that the potential for the obligation occurring is:

If a bond's stated rate of interest is equal to the market rate of interest, the bond will be issued at:

Many salespersons have part of their payroll determined by a percent of sales. These are called:

Which current liability is generally listed first?

Wolfe Company has a 5-year mortgage for $120,000 which requires 4 equal payments of principal plus interest. In the first year of the mortgage, Wolfe will report this liability as a:

Which of the following would NOT be considered a contingent liability?

Withheld payroll deductions become:

A major difference between Accounts Payable and Notes Payable is that:

In general it is better to use current liabilities to finance current assets and long-term debt to finance long-term assets.

If a $15,000, 8 percent, 20-year bond was issued at 95 on November 1, how much will accrued interest payable be on December 31 if interest payments are made annually? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

When sales tax is remitted to the state, the journal entry includes a debit to Cash and a credit to Sales Tax Payable.

Vintage Boutique reported Interest expense of $5,500, Income tax expense of $24,000 and Net income of $77,000. Vintage Boutique's interest coverage ratio is: (Round your final answer to two decimal places.)

On January 1, Clive Corporation signed a $460,000, 6%, 30-year mortgage that requires semiannual payments of $16,621 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be: (Round your final answer to the nearest dollar.)

A mortgage is a secured note because the building will serve as collateral.

The journal entry to record the employer's portion of FICA tax includes a:

In a(n)_____ lease the lessee will record the lease by debiting an asset account and crediting Lease Payable.

Which of the following would be considered a contingent liability?

Which of the following would NOT be a liability?

On January 1, Greene Autos signed a $250,000, 6%, 30-year mortgage that requires semiannual payments of $9,033 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar)to:

A $9,000 bond issue with a stated interest rate of 9%, when the market rate of interest is 9%, means that the bond will sell for:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters