Exam 9: Current Liabilities and Fair Value Accounting

Lawsuits against a company in connection with an industrial accident would not be disclosed in the notes to the financial statements as a contingent liability until the lawsuits have been settled.

The declaration of dividends is solely the decision of the corporation's board of directors.

Sales Tax Payable is an example of a(n)

A liability is usually established for product warranties despite uncertainty as to the amount of the liability.

Calculate answers to the following questions using future value and/or present value tables. a.If an accumulation of $1,000 is desired at the end of four years,what bank deposit must be made now to accomplish that goal,assuming 10 percent interest compounded annually? b.A deposit of $600 made at the end of every six months for five years would grow to what amount,assuming 8 percent interest compounded semiannually.Round amounts to the nearest dollar.

Use this information to answer the following question. The transactions below pertain to Bolivar Company,whose fiscal year ends September 30. The entry to record the September 10 transaction (amounts rounded)is:

Match each definition with the correct term below. -Simple interest

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Which of the following does not represent a liability?

Meggie's Fitness center received $720 from a customer in advance for one year membership in the fitness center.The entry that would be made to record the fee receipt is:

A contingent liability is not entered into the accounting records under any circumstances.

Calculate answers to the following questions using future value and/or present value tables. a.If $100 is deposited in an account paying 8 percent simple interest,what will be the value of the account in five years? b.If an accumulation of $4,000 is desired at the end of four years,what amount must be deposited now to accomplish that goal,assuming 12 percent interest compounded annually? c.A deposit of $1,000 made at the end of every six months for five years will grow to what amount,assuming 10 percent interest compounded semiannually? d.What is the present value of $150 received at the end of each year for 4 years,assuming 9 percent interest compounded annually? e.What amount must be deposited at the bank today to grow to $10,000 in five years,assuming 14 percent interest compounded semiannually?

Use this information to answer the following question. Baker Company has the following information for the pay period of January 1-15.Payment occurs on January 20. The entry on January 20 would be a debit to

A contingent liability is a liability that may materialize in the future because of something that happened in the past.

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

Social security and Medicare taxes are borne entirely by the employer.

A contingent liability is recorded in the accounting records

Which of the following phrases is not descriptive of an ordinary annuity?

The federal and state unemployment tax rates are not identical.

A contingent liability is recognized when the likelihood of loss is probable and the amount can be reasonably estimated.