Question 1

Which statement about sales taxes is correct?

Accepted Answer

A)  Businesses can recover the PST paid on all of their purchases. 
B)  Goods purchased for resale are exempt from PST. 
C)  Businesses remit only the GST collected on sales transactions. 
D)  The same products that are exempt from HST are exempt from PST. 
A)  Businesses can recover the PST paid on all of their purchases. 
B)  Goods purchased for resale are exempt from PST. 
C)  Businesses remit only the GST collected on sales transactions. 
D)  The same products that are exempt from HST are exempt from PST.

Question 2

Deck Contractors Inc.(DC)enters into a contract to construct six decks adjacent to a commercial building.The purchaser has agreed to pay $8,500 for each deck (total $51,000).The terms of the contract call for a 40% deposit ($3,400 per deck)at time of contract signing and payment of the balance ($5,100 per deck)as each deck is completed.
The contract is signed on October 1,2017.Two decks are completed in 2017 and the balance in 2018.DC has a December 31 year-end.The cost to DC of constructing each deck is $3,400,which it pays in cash.
Required:
a.Prepare summary journal entries for 2017 and 2018.
b.What is the balance in the deferred revenue account as at December 31,2017?

Accepted Answer

a.Summary journal entries
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Question 3

List three reasons why the recording of sales taxes is not straightforward.

Accepted Answer

1.Some products are exempt from PST and

Question 4

What are "liabilities"? Differentiate between financial liabilities and non-financial liabilities.

Accepted Answer

• Liabilities are present obligations of

Question 5

Describe what a non-financial liability is,and provide three examples of non-financial liabilities.

Accepted Answer

A non-financial liability is an obligati

Question 6

Which of the following liabilities will be reported only as a current liability?

Accepted Answer

A)  Bank overdraft. 
B)  Unearned revenue. 
C)  Bond payable that matures in two years. 
D)  Obligation under customer loyalty plan. 
A)  Bank overdraft. 
B)  Unearned revenue. 
C)  Bond payable that matures in two years. 
D)  Obligation under customer loyalty plan.

Question 7

Which statement about warranties is correct?

Accepted Answer

A)  Warranties are provisions. 
B)  Warranties included with the product sold are accounted for under IFSR15. 
C)  Warranties are financial liabilities. 
D)  Warranties included with the product sold are accounted for under IAS39. 
A)  Warranties are provisions. 
B)  Warranties included with the product sold are accounted for under IFSR15. 
C)  Warranties are financial liabilities. 
D)  Warranties included with the product sold are accounted for under IAS39.

Question 8

Which statement is correct?

Accepted Answer

A)  Supplier discounts can only be accounted for by using the gross method. 
B)  The amount owing for trade payables is generally not known with a high degree of certainty. 
C)  An accrued liability is needed when a company has received goods, but not the invoice. 
D)  Completeness means that obligations are reported in the proper accounting period. 
A)  Supplier discounts can only be accounted for by using the gross method. 
B)  The amount owing for trade payables is generally not known with a high degree of certainty. 
C)  An accrued liability is needed when a company has received goods, but not the invoice. 
D)  Completeness means that obligations are reported in the proper accounting period.

Question 9

Which is not an example of a financial liability?

Accepted Answer

A)  Payment to supplier for raw material received. 
B)  Obligation to repay a US dollar bank loan. 
C)  Obligation under a finance lease. 
D)  Obligation under a customer loyalty program. 
A)  Payment to supplier for raw material received. 
B)  Obligation to repay a US dollar bank loan. 
C)  Obligation under a finance lease. 
D)  Obligation under a customer loyalty program.

Question 10

A clothing store maintains a loyalty program for its customers.For every purchase,members receive points that do not expire.In fiscal 2016,the store made sales of $1 million and awarded 50,000 points that have a fair value of $50,000.The company estimates that approximately 75% of these points will be redeemed by members.Members redeemed 10,000 points in fiscal 2017.
Provide the necessary journal entries for fiscal 2016 and 2017.

Accepted Answer

2016
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Question 11

A supplier sued Pneumatic Systems Inc.for $200,000 for breach of contract.Pneumatic's legal counsel believes that they will almost certainly be found liable.Based on previous results,the lawyer estimates that there is a 60% probability that the supplier will be awarded the $200,000; a 30% probability that the judgment will be $150,000; and a 10% probability that $100,000 will be conferred. Assuming that Pneumatic reports its financial results in accordance with IFRS,indicate which of the following will be the appropriate accounting treatment:

Accepted Answer

A)  Recognize a liability of $175,000. 
B)  Recognize a liability of $200,000. 
C)  Disclose the details of the contingency in the notes to the financial statements. 
D)  Recognize an asset of $175,000. 
A)  Recognize a liability of $175,000. 
B)  Recognize a liability of $200,000. 
C)  Disclose the details of the contingency in the notes to the financial statements. 
D)  Recognize an asset of $175,000.

Question 12

A company,using a perpetual inventory system,sells goods on credit for $10,000.The applicable HST rate is 10%.The cost of goods sold was $6,000.Sales taxes are remitted on a monthly basis.Prepare the necessary journal entries for this transaction.

Accepted Answer

Sale of go

Question 13

For each independent situation:
1.Langford Airport Parking Ltd.awards customers 250 reward miles per stay,in a well-known airline mileage program.Langford pays the airline $0.06 for each mile.Langford,which is not an agent for the airline,estimates that the fair value of the miles is the same as the price paid-$0.06.Parking revenues on May 24,2017 were $52,000.Langford awarded 40,000 airline points to its customers.
2.On October 15,2017,Hamilton Windows and Sash properly recorded the issue of a $12,000,7% note due April 15,2018.Hamilton is preparing its financial statements for the year ended December 31,2018.Hamilton does not make adjusting entries during the year.
Required:
For each of the situations described above,prepare the required journal entry for the underlined entity.If a journal entry is not required,explain why.

Accepted Answer

1.This is a third-party reward

Question 14

Which statement about contingencies is correct?

Accepted Answer

A)  It involves only potential economic outflows of resources. 
B)  It is a possible condition that depends upon the outcome of a future event. 
C)  It involves uncertainty about either the timing or amount of payment. 
D)  It is an existing condition that depends upon the outcome of a future event. 
A)  It involves only potential economic outflows of resources. 
B)  It is a possible condition that depends upon the outcome of a future event. 
C)  It involves uncertainty about either the timing or amount of payment. 
D)  It is an existing condition that depends upon the outcome of a future event.

Question 15

Which statement about contingencies is correct?

Accepted Answer

A)  If the future outcome is probable and reliably measurable, a provision is recorded. 
B)  If the future outcome is probable, disclosure is required if it is reliably measurable. 
C)  If the future outcome is probable, but not reliably measurable, no action is required. 
D)  If the future outcome is probable, a provision is required, even if it is not reliably measurable, 
A)  If the future outcome is probable and reliably measurable, a provision is recorded. 
B)  If the future outcome is probable, disclosure is required if it is reliably measurable. 
C)  If the future outcome is probable, but not reliably measurable, no action is required. 
D)  If the future outcome is probable, a provision is required, even if it is not reliably measurable,

Question 16

Gladstone Distributors Inc.entered into a non-cancellable contract to buy 40,000 litres of linseed oil for $6 per litre for resale purposes.Gladstone intends to resell the oil to retail paint outlets for $10 per litre.The contract was entered into on October 31,2016 for delivery on January 15,2017.Gladstone's year-end is December 31.On December 12,2016,Gladstone's supplier reduces the price to $5.10 per litre due to adverse market conditions.
Required:
a.Outline the required accounting treatment assuming that Gladstone expects it can sell the oil for $6.45 per litre.
b.Outline the required accounting treatment assuming that Gladstone expects it can sell the oil for $5.55 per litre.

Accepted Answer

@#IMG-DLM&_TB1321_00_TB1321_00_TB1321_00 a.While t

Question 17

A company purchased inventory from Europe valued at $100,000 euros.The spot rate at the transaction date was C$1.00 = 0.85 Euro.The spot rate on year-end date was C$1.00 = 0.80 Euro.When the company paid the supplier 3 months after year-end the spot rate was C$1.00 = 0.90 Euro.
Provide all necessary journal entries.Round all amounts to nearest dollar.

Accepted Answer

Purchase d

Question 18

Which of the following liabilities can potentially be reported as either or both a current and a non-current liability?

Accepted Answer

A)  Bank overdraft. 
B)  Unearned revenue. 
C)  180-day bank loan. 
D)  Income taxes payable. 
A)  Bank overdraft. 
B)  Unearned revenue. 
C)  180-day bank loan. 
D)  Income taxes payable.

Question 19

Which is not a current liability?

Accepted Answer

A)  Accounts payable due in 120 days. 
B)  Bank loan due in three years that is in default. 
C)  Bonds payable maturing in five years. 
D)  Certain held for trading liabilities. 
A)  Accounts payable due in 120 days. 
B)  Bank loan due in three years that is in default. 
C)  Bonds payable maturing in five years. 
D)  Certain held for trading liabilities.

Question 20

How are "purchase discounts lost" reported in the financial statements?

Accepted Answer

A)  As a reduction of sales. 
B)  As an increase in liability. 
C)  As an increase in inventory. 
D)  As an expense item. 
A)  As a reduction of sales. 
B)  As an increase in liability. 
C)  As an increase in inventory. 
D)  As an expense item.

Which statement about sales taxes is correct?

List three reasons why the recording of sales taxes is not straightforward.

What are "liabilities"? Differentiate between financial liabilities and non-financial liabilities.

Describe what a non-financial liability is,and provide three examples of non-financial liabilities.

Which of the following liabilities will be reported only as a current liability?

Which statement about warranties is correct?

Which statement is correct?

Which is not an example of a financial liability?

A company,using a perpetual inventory system,sells goods on credit for $10,000.The applicable HST rate is 10%.The cost of goods sold was $6,000.Sales taxes are remitted on a monthly basis.Prepare the necessary journal entries for this transaction.

Which statement about contingencies is correct?

Which statement about contingencies is correct?

Which of the following liabilities can potentially be reported as either or both a current and a non-current liability?

Which is not a current liability?

How are "purchase discounts lost" reported in the financial statements?

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters

Exam 1: Current Liabilities and Contingencies

Which statement about sales taxes is correct?

List three reasons why the recording of sales taxes is not straightforward.

What are "liabilities"? Differentiate between financial liabilities and non-financial liabilities.

Describe what a non-financial liability is,and provide three examples of non-financial liabilities.

Which of the following liabilities will be reported only as a current liability?

Which statement about warranties is correct?

Which statement is correct?

Which is not an example of a financial liability?

A company,using a perpetual inventory system,sells goods on credit for $10,000.The applicable HST rate is 10%.The cost of goods sold was $6,000.Sales taxes are remitted on a monthly basis.Prepare the necessary journal entries for this transaction.

Which statement about contingencies is correct?

Which statement about contingencies is correct?

Which of the following liabilities can potentially be reported as either or both a current and a non-current liability?

Which is not a current liability?

How are "purchase discounts lost" reported in the financial statements?

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters