Question 1

Contingent liabilities pose an ethical challenge because they're based on past events, they are easier to manipulate.

Accepted Answer

A) True 
 B)False

Question 2

Benefits are extra compensation that is paid directly to the employee.

Accepted Answer

A) True 
 B)False

Question 3

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

Accepted Answer

A) stated 
B) market 
C) variable 
D) maturity 
A) stated 
B) market 
C) variable 
D) maturity

Question 4

$300,000 of 6%, 20-year bonds were sold for $330,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to: (Round your final answer to the nearest dollar.)

Accepted Answer

A) debit Interest Expense $9,000; credit Cash, $9,000. 
B) debit Interest Expense $9,750; credit Premium on bonds payable, $750; credit Cash, $9,000. 
C) debit Interest Expense $8,250; debit Premium on bonds payable, $750; credit Cash, $9,000. 
D) debit Interest Expense $8,250; credit Cash, $8,250. 
A) debit Interest Expense $9,000; credit Cash, $9,000. 
B) debit Interest Expense $9,750; credit Premium on bonds payable, $750; credit Cash, $9,000. 
C) debit Interest Expense $8,250; debit Premium on bonds payable, $750; credit Cash, $9,000. 
D) debit Interest Expense $8,250; credit Cash, $8,250.

Question 5

The current portion of long-term debt represents the principal and interest payments on long-term installment obligations that are due within one year.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is TRUE regarding the debt ratio?

Accepted Answer

A) The debt ratio focuses on the total liabilities of an organization. 
B) The debt ratio reveals the percentage of a business' assets financed with liabilities. 
C) The debt ratio is used to analyze a business's ability to pay its current obligations as they come due. 
D) Both A and B are true statements regarding the debt ratio. 
A) The debt ratio focuses on the total liabilities of an organization. 
B) The debt ratio reveals the percentage of a business' assets financed with liabilities. 
C) The debt ratio is used to analyze a business's ability to pay its current obligations as they come due. 
D) Both A and B are true statements regarding the debt ratio.

Question 7

Why are contingent liabilities considered unique and different from all other liabilities?

Accepted Answer

A) Whether or not a company has an obligation depends on the result of a future event. 
B) Whether or not a company has an obligation depends on the result of a past event. 
C) The company knows the amount of the obligation. 
D) Both B and C are unique to contingent liabilities. 
A) Whether or not a company has an obligation depends on the result of a future event. 
B) Whether or not a company has an obligation depends on the result of a past event. 
C) The company knows the amount of the obligation. 
D) Both B and C are unique to contingent liabilities.

Question 8

$200,000 of 6%, 25-year bonds were sold for $160,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to:

Accepted Answer

A) debit Interest Expense $6,000; credit Cash, $6,000. 
B) debit Interest Expense $6,800; credit Discount on bonds payable, $800; credit Cash, $6,000. 
C) debit Interest Expense $5,200; debit Discount on bonds payable, $800; credit Cash, $6,000. 
D) debit Interest Expense $6,800; credit Cash, $6,800. 
A) debit Interest Expense $6,000; credit Cash, $6,000. 
B) debit Interest Expense $6,800; credit Discount on bonds payable, $800; credit Cash, $6,000. 
C) debit Interest Expense $5,200; debit Discount on bonds payable, $800; credit Cash, $6,000. 
D) debit Interest Expense $6,800; credit Cash, $6,800.

Question 9

The tax rate on the OASDI portion of FICA is:

Accepted Answer

A) 7.65%. 
B) 1.45%. 
C) 6.20%. 
D) 0.80%. 
A) 7.65%. 
B) 1.45%. 
C) 6.20%. 
D) 0.80%.

Question 10

If the likelihood of an obligation is remote:

Accepted Answer

A) no action is necessary in the accounting treatment. 
B) the disclosure with explanation is put into the financial statement footnotes. 
C) the obligation with the estimated dollars is recorded on the Balance Sheet. 
D) the obligation with the estimated dollars is recorded and put into the footnotes. 
A) no action is necessary in the accounting treatment. 
B) the disclosure with explanation is put into the financial statement footnotes. 
C) the obligation with the estimated dollars is recorded on the Balance Sheet. 
D) the obligation with the estimated dollars is recorded and put into the footnotes.

Question 11

A $30,000 bond issue with a stated rate of interest of 6%, when the market rate of interest is 7%, means that the bond will be sold for:

Accepted Answer

A) $30,000 
B) more than $30,000. 
C) less than $30,000. 
D) the maturity value. 
A) $30,000 
B) more than $30,000. 
C) less than $30,000. 
D) the maturity value.

Question 12

Pay stated at a monthly or annual rate is considered to be a:

Accepted Answer

A) salary. 
B) wage. 
C) bonus. 
D) commission. 
A) salary. 
B) wage. 
C) bonus. 
D) commission.

Question 13

The rate of interest that is printed on the bond is called the ________ rate of interest.

Accepted Answer

A) stated 
B) market 
C) variable 
D) maturity 
A) stated 
B) market 
C) variable 
D) maturity

Question 14

The journal entry to record $330,000 of bonds that were issued at 97 would be to:

Accepted Answer

A) debit Cash, $330,000; credit Bonds payable, $320,100; credit Premium on bonds payable, $9,900. 
B) debit Cash, $320,100; credit Bonds payable, $320,100. 
C) debit Cash, $330,000; credit Bonds payable, $330,000. 
D) debit Cash, $320,100; debit Discount on bonds payable, $9,900; credit Bonds payable, $330,000. 
A) debit Cash, $330,000; credit Bonds payable, $320,100; credit Premium on bonds payable, $9,900. 
B) debit Cash, $320,100; credit Bonds payable, $320,100. 
C) debit Cash, $330,000; credit Bonds payable, $330,000. 
D) debit Cash, $320,100; debit Discount on bonds payable, $9,900; credit Bonds payable, $330,000.

Question 15

Both the formulas for current ratio and debt ratio use current liabilities in the computation.

Accepted Answer

A) True 
 B)False

Question 16

Tazo Inc. signed a $12,000 10% 15-year installment note on December 1, 2016. The note requires quarterly payments of $200 plus interest on March 1, June 1, September 1, and December 1 of each year. How will Tazo classify this loan on its December 31, 2016 Balance Sheet?

Accepted Answer

A) Current Portion of Long-term debt, $400; Long-term debt, $11,600 
B) Current Portion of Long-term debt, $800; Long-term debt, $11,200 
C) Current Portion of Long-term debt, $200; Long-term debt, $11,800 
D) Current Portion of Long-term debt, $600; Long-term debt, $11,400 
A) Current Portion of Long-term debt, $400; Long-term debt, $11,600 
B) Current Portion of Long-term debt, $800; Long-term debt, $11,200 
C) Current Portion of Long-term debt, $200; Long-term debt, $11,800 
D) Current Portion of Long-term debt, $600; Long-term debt, $11,400

Question 17

A note payable that is due within one year is classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 18

Dante's Designs has current assets of $57,000 long-term assets of $139,000 current liabilities of $49,000 long-term liabilities of $93,000. Dante's debt ratio is: (Round your final answer to the nearest whole number.)

Accepted Answer

A) 86%. 
B) 67%. 
C) 35%. 
D) 72%. 
A) 86%. 
B) 67%. 
C) 35%. 
D) 72%.

Question 19

Contingent liabilities may be classified as:

Accepted Answer

A) current liabilities only. 
B) long-term liabilities only. 
C) notes in the financial statements only. 
D) either current or long-term liabilities. 
A) current liabilities only. 
B) long-term liabilities only. 
C) notes in the financial statements only. 
D) either current or long-term liabilities.

Question 20

The lower the number of withholdings claimed on a W-4, the:

Accepted Answer

A) higher the gross pay. 
B) higher the net pay. 
C) lower the gross pay. 
D) lower the net pay. 
A) higher the gross pay. 
B) higher the net pay. 
C) lower the gross pay. 
D) lower the net pay.

Contingent liabilities pose an ethical challenge because they're based on past events, they are easier to manipulate.

Benefits are extra compensation that is paid directly to the employee.

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

$300,000 of 6%, 20-year bonds were sold for $330,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to: (Round your final answer to the nearest dollar.)

The current portion of long-term debt represents the principal and interest payments on long-term installment obligations that are due within one year.

Which of the following statements is TRUE regarding the debt ratio?

Why are contingent liabilities considered unique and different from all other liabilities?

$200,000 of 6%, 25-year bonds were sold for $160,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to:

The tax rate on the OASDI portion of FICA is:

If the likelihood of an obligation is remote:

A $30,000 bond issue with a stated rate of interest of 6%, when the market rate of interest is 7%, means that the bond will be sold for:

Pay stated at a monthly or annual rate is considered to be a:

The rate of interest that is printed on the bond is called the ________ rate of interest.

The journal entry to record $330,000 of bonds that were issued at 97 would be to:

Both the formulas for current ratio and debt ratio use current liabilities in the computation.

Tazo Inc. signed a $12,000 10% 15-year installment note on December 1, 2016. The note requires quarterly payments of $200 plus interest on March 1, June 1, September 1, and December 1 of each year. How will Tazo classify this loan on its December 31, 2016 Balance Sheet?

A note payable that is due within one year is classified as a current liability.

Dante's Designs has current assets of $57,000 long-term assets of $139,000 current liabilities of $49,000 long-term liabilities of $93,000. Dante's debt ratio is: (Round your final answer to the nearest whole number.)

Contingent liabilities may be classified as:

The lower the number of withholdings claimed on a W-4, the:

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

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Exam 9: Current Liabilities and Long-Term Debt

Contingent liabilities pose an ethical challenge because they're based on past events, they are easier to manipulate.

Benefits are extra compensation that is paid directly to the employee.

The rate of interest that investors are willing to receive for similar bonds of equal risk at the current time is the ________ rate of interest.

$300,000 of 6%, 20-year bonds were sold for $330,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to: (Round your final answer to the nearest dollar.)

The current portion of long-term debt represents the principal and interest payments on long-term installment obligations that are due within one year.

Which of the following statements is TRUE regarding the debt ratio?

Why are contingent liabilities considered unique and different from all other liabilities?

$200,000 of 6%, 25-year bonds were sold for $160,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to:

The tax rate on the OASDI portion of FICA is:

If the likelihood of an obligation is remote:

A $30,000 bond issue with a stated rate of interest of 6%, when the market rate of interest is 7%, means that the bond will be sold for:

Pay stated at a monthly or annual rate is considered to be a:

The rate of interest that is printed on the bond is called the ________ rate of interest.

The journal entry to record $330,000 of bonds that were issued at 97 would be to:

Both the formulas for current ratio and debt ratio use current liabilities in the computation.

Tazo Inc. signed a $12,000 10% 15-year installment note on December 1, 2016. The note requires quarterly payments of $200 plus interest on March 1, June 1, September 1, and December 1 of each year. How will Tazo classify this loan on its December 31, 2016 Balance Sheet?

A note payable that is due within one year is classified as a current liability.

Dante's Designs has current assets of $57,000 long-term assets of $139,000 current liabilities of $49,000 long-term liabilities of $93,000. Dante's debt ratio is: (Round your final answer to the nearest whole number.)

Contingent liabilities may be classified as:

The lower the number of withholdings claimed on a W-4, the:

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

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