Exam 9: Current Liabilities, Contingencies, and the Time Value of Money

Generally,an increase in a current liability results in an increase in the Operating Activities category of the cash flow statement.

The present value and future value concepts are applied to measure the amount of several accounts common in accounting.What are some accounts that are valued in this manner?

Hanover,Inc. Use the selected data from the comparative financial statements for Hanover,Inc.to answer the questions that follow. Hanover, Inc. Balance Sheet Accounts (all accounts have normal balances) (in millions) Dec. 30,2018 Dec. 31,2017 Inventories \ 1,780 \ 1,649 Total current assets \ 9,428 \ 8,625 Liabilities in order of significance: Long-term debt \ 14,465 \ 15,001 Other noncurrent liabilities 4,421 3,148 Deferred income taxes 3,504 3,543 Accounts payable 2,556 2,468 Other current liabilities 2,066 1,738 Accrued sal aries and wages 1,538 1,082 Short-term borrowings 1,200 1,126 Accrued advertising expense 793 928 Income taxes payable 658 1,142 -Refer to the account information for Hanover,Inc. ? Required Calculate the current and quick ratios for 2018 and 2017.Comment on the direction and significance of the change in the ratios.

What is the correct classification of the account Discount on Notes Payable?

The landlord records the security deposit she collects from the tenant as a(n)

Which of the following statements regarding the inclusion of liabilities on the statement of cash flows is true?

An invoice received from a supplier for $8,000 on January 1 with terms 1/15,n/30 means that the company should pay

Simple interest on a loan can be calculated by multiplying the principal by the annual interest rate expressed as a percentage of the time in years or a fraction of the time in years.

In the statement of cash flows,a decrease in accounts payable would be shown as an increase in the Operating Activities category.

In 2017,Baloga Heating Company sold 400 water heaters for $350 each.The water heaters carry a two-year warranty for repairs.Baloga estimates that repair costs will average 2% of the total selling price.How much is recorded in the warranty liability account as a result of selling the water heaters during 2017?

Valance & Company Use the selected data from the balance sheet and cash flow statements for Valance & Company to answer the questions that follow -Refer to the data for Valance & Company. Required (1)What current liabilities appearing on the balance sheet do not appear in the Operating Activities section of the statement of cash flows? Why? (2)What current liabilities appear in the Operating Activities category of Valance's statement of cash flows? How does the change for each year affect the cash flows from operating activities for that year?

A firm's year ends on December 31.Its tax is computed and submitted to the U.S.Treasury on March 15 of the following year.When should the taxes be reported as a liability?

You have received an email from a new accounting client,Jamal Parker,who has just started a new business.Jamal would like you to explain whether it is really that beneficial for him to take advantage of a 2/10,net 30 discount offered by one of his suppliers,given his limited cash flow.In a memo,explain to him why this is or is not a sound financial move for his new company.Most firms attempt to pay their accounts payable within the discount period to take advantage of the discount.Why is that normally a sound financial move?

A bank loaned Darden Company $10,000 on a one-year,6% note,but deducted the interest in advance.The journal entry made by Darden to record receipt of the cash would include a(n)

The current maturity of long-term debt is a current liability.

Advance ticket sales for a concert next month are a current liability.

Carrington,Inc.recorded $97,000 in salary expense for January 2017.Its beginning balance in salaries payable was $3,000,and its ending balance was $4,000.How much was paid in cash for salaries during January 2017?

When a bank deducts the interest on a note in advance,the note has been __________.

The classification of current liabilities is closely tied to the concept of __________.

In 2017,Morton Co.sold 100 hot air balloons at $4,000 each.The balloons carry a five-year warranty for defects.Morton estimates that repair costs will average 4% of the total selling price.The estimated warranty liability at the beginning of the year was $42,000.$11,000 in claims was actually incurred during the year to honor their warranty.What was the balance of the estimated warranty liability at the end of the year?