Question 1

Which of the following correctly describes Interest payable?

Accepted Answer

A) Interest payable is shown on the balance sheet as a non-current liability. 
B) Interest payable is shown on the balance sheet as a current liability. 
C) Interest payable is shown on the income statement as an operating expense. 
D) Interest payable is shown on the balance sheet as a current asset. 
A) Interest payable is shown on the balance sheet as a non-current liability. 
B) Interest payable is shown on the balance sheet as a current liability. 
C) Interest payable is shown on the income statement as an operating expense. 
D) Interest payable is shown on the balance sheet as a current asset. B

Question 2

Which of the following is an amount for products or services purchased on account?

Accepted Answer

A) Unearned revenue 
B) Accrued expense 
C) Accounts payable 
D) Estimated warranty payable 
A) Unearned revenue 
B) Accrued expense 
C) Accounts payable 
D) Estimated warranty payable C

Question 3

Which of the following occurs when a company records accrued interest expense on a loan payable?

Accepted Answer

A) Loan payable is credited. 
B) Cash is debited. 
C) Interest payable is credited. 
D) Interest expense is credited. 
A) Loan payable is credited. 
B) Cash is debited. 
C) Interest payable is credited. 
D) Interest expense is credited. C

Question 4

An accrued expense is an expense that has been incurred,but has not yet been paid.

Accepted Answer

A) True 
 B)False

Question 5

A $40,000,three-month,8% note payable was issued on 1 December 2017.What is the amount of accrued interest on 31 December 2017?

Accepted Answer

A) $267 
B) $400 
C) $428 
D) $200 
A) $267 
B) $400 
C) $428 
D) $200

Question 6

Gross pay is the total amount of compensation earned by an employee,before any deductions are made.

Accepted Answer

A) True 
 B)False

Question 7

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behaviour.

Accepted Answer

A) True 
 B)False

Question 8

Jumbo Sales offers warranties on all their electronic goods.Warranty expense is estimated at 3% of sales revenue.In 2016,Jumbo had $595,000 of sales.In the same year,Jumbo paid out $16,000 of warranty payments.Which of the following is the entry needed to record the estimated warranty expense?

Accepted Answer

A)  $$\begin{array} { | l | l | l | } 
\hline \text { Warranty expense } & \$ 16,000 & \
\hline \begin{array} { l } 
\text { Estimated warranty } \
\text { payable }
\end{array} & & 16,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Warranty expense } & \$ 17,850 & \
\hline \text { Sales revenue } & & 17,850 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | } 
\hline \text { Warranty expense } & \$ 17,850 & \
\hline \begin{array} { l } 
\text { Estimated warranty } \
\text { payable }
\end{array} & & 17,850 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated warranty payable } & \$ 16,000 & \
\hline \text { Cash } & & 16,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | l | l | } 
\hline \text { Warranty expense } & \$ 16,000 & \
\hline \begin{array} { l } 
\text { Estimated warranty } \
\text { payable }
\end{array} & & 16,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Warranty expense } & \$ 17,850 & \
\hline \text { Sales revenue } & & 17,850 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | } 
\hline \text { Warranty expense } & \$ 17,850 & \
\hline \begin{array} { l } 
\text { Estimated warranty } \
\text { payable }
\end{array} & & 17,850 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated warranty payable } & \$ 16,000 & \
\hline \text { Cash } & & 16,000 \
\hline
\end{array}$$

Question 9

Estimated warranty payable would be included in the liability section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

On 31 October,General Stores signed a six-month,9% loan payable to purchase inventory costing $10 000.The loan requires payment of principal and interest at maturity.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Accepted Answer

A) Interest payable $900 
B) Interest payable $150 
C) Principal payable $6 667 
D) Interest payable $300 
A) Interest payable $900 
B) Interest payable $150 
C) Principal payable $6 667 
D) Interest payable $300

Question 11

Contingent liabilities sometimes pose an ethical challenge because they are not real liabilities and are easy to overlook.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

Accepted Answer

A) Consistency principle 
B) Matching principle 
C) Materiality concept 
D) Profit recognition principle 
A) Consistency principle 
B) Matching principle 
C) Materiality concept 
D) Profit recognition principle

Question 13

General Stores borrowed $50 000 at 6% interest on a long-term loan payable on 31 August.At 31 December,interest plus $10 000 of the principal are payable within one year.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Accepted Answer

A) Interest payable $600 
B) Interest payable $1 000 
C) Interest payable $3 000 
D) Interest payable $2 000 
A) Interest payable $600 
B) Interest payable $1 000 
C) Interest payable $3 000 
D) Interest payable $2 000

Question 14

In which of the following periods should the estimated warranty liability be debited?

Accepted Answer

A) The period when cash is paid to repair or replace the product 
B) The period when the product is sold 
C) The period when the product is shipped to the customer 
D) The period when cash is collected for the sale of the product 
A) The period when cash is paid to repair or replace the product 
B) The period when the product is sold 
C) The period when the product is shipped to the customer 
D) The period when cash is collected for the sale of the product

Question 15

Which of the following is a control procedure to prevent fictitious persons cashing pay cheques?

Accepted Answer

A) Requiring photo IDs for employees picking up their pay cheques 
B) Keeping computerised records of payroll data 
C) Serial numbering of pay cheques 
D) Having employees clock in and out of work 
A) Requiring photo IDs for employees picking up their pay cheques 
B) Keeping computerised records of payroll data 
C) Serial numbering of pay cheques 
D) Having employees clock in and out of work

Question 16

Which of the following is an expense of the employer?

Accepted Answer

A) Employee income taxes 
B) Deductions for union membership 
C) Payroll tax 
D) Employee benefits 
A) Employee income taxes 
B) Deductions for union membership 
C) Payroll tax 
D) Employee benefits

Question 17

Which of the following is a major control risk in the payroll area?

Accepted Answer

A) Theft of inventory by staff 
B) Fictitious persons cashing pay cheques 
C) Contracts being awarded to relatives of employees 
D) Expenses being recorded as assets in order to manipulate earnings 
A) Theft of inventory by staff 
B) Fictitious persons cashing pay cheques 
C) Contracts being awarded to relatives of employees 
D) Expenses being recorded as assets in order to manipulate earnings

Question 18

The Statewide Sales Company has gross pay for March of $45 000.The first journal entry in the payroll cycle to record salary expense would include a credit to Cash for $45 000.

Accepted Answer

A) True 
 B)False

Question 19

Estimated warranty payable would be included in the operating expense section of the income statement.

Accepted Answer

A) True 
 B)False

Question 20

Payroll taxes are withheld from each employee's pay cheque.

Accepted Answer

A) True 
 B)False

Which of the following correctly describes Interest payable?

Which of the following is an amount for products or services purchased on account?

Which of the following occurs when a company records accrued interest expense on a loan payable?

An accrued expense is an expense that has been incurred,but has not yet been paid.

A $40,000,three-month,8% note payable was issued on 1 December 2017.What is the amount of accrued interest on 31 December 2017?

Gross pay is the total amount of compensation earned by an employee,before any deductions are made.

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behaviour.

Jumbo Sales offers warranties on all their electronic goods.Warranty expense is estimated at 3% of sales revenue.In 2016,Jumbo had $595,000 of sales.In the same year,Jumbo paid out $16,000 of warranty payments.Which of the following is the entry needed to record the estimated warranty expense?

Estimated warranty payable would be included in the liability section of the balance sheet.

On 31 October,General Stores signed a six-month,9% loan payable to purchase inventory costing $10 000.The loan requires payment of principal and interest at maturity.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Contingent liabilities sometimes pose an ethical challenge because they are not real liabilities and are easy to overlook.

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

General Stores borrowed $50 000 at 6% interest on a long-term loan payable on 31 August.At 31 December,interest plus $10 000 of the principal are payable within one year.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

In which of the following periods should the estimated warranty liability be debited?

Which of the following is a control procedure to prevent fictitious persons cashing pay cheques?

Which of the following is an expense of the employer?

Which of the following is a major control risk in the payroll area?

The Statewide Sales Company has gross pay for March of $45 000.The first journal entry in the payroll cycle to record salary expense would include a credit to Cash for $45 000.

Estimated warranty payable would be included in the operating expense section of the income statement.

Payroll taxes are withheld from each employee's pay cheque.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

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Exam 11: Current Liabilities and Payroll

Which of the following correctly describes Interest payable?

Which of the following is an amount for products or services purchased on account?

Which of the following occurs when a company records accrued interest expense on a loan payable?

An accrued expense is an expense that has been incurred,but has not yet been paid.

A $40,000,three-month,8% note payable was issued on 1 December 2017.What is the amount of accrued interest on 31 December 2017?

Gross pay is the total amount of compensation earned by an employee,before any deductions are made.

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behaviour.

Jumbo Sales offers warranties on all their electronic goods.Warranty expense is estimated at 3% of sales revenue.In 2016,Jumbo had $595,000 of sales.In the same year,Jumbo paid out $16,000 of warranty payments.Which of the following is the entry needed to record the estimated warranty expense?

Estimated warranty payable would be included in the liability section of the balance sheet.

On 31 October,General Stores signed a six-month,9% loan payable to purchase inventory costing $10 000.The loan requires payment of principal and interest at maturity.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Contingent liabilities sometimes pose an ethical challenge because they are not real liabilities and are easy to overlook.

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

General Stores borrowed $50 000 at 6% interest on a long-term loan payable on 31 August.At 31 December,interest plus $10 000 of the principal are payable within one year.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

In which of the following periods should the estimated warranty liability be debited?

Which of the following is a control procedure to prevent fictitious persons cashing pay cheques?

Which of the following is an expense of the employer?

Which of the following is a major control risk in the payroll area?

The Statewide Sales Company has gross pay for March of $45 000.The first journal entry in the payroll cycle to record salary expense would include a credit to Cash for $45 000.

Estimated warranty payable would be included in the operating expense section of the income statement.

Payroll taxes are withheld from each employee's pay cheque.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

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