Question 1

The annual interest earned on an amount deposited into a bank account will be the same each year when compound interest is used.

Accepted Answer

A) True 
 B)False  False

Question 2

Gross earnings minus deductions equals take-home pay.

Accepted Answer

A) True 
 B)False  True

Question 3

Use this information to answer the following question. $$\begin{array} { | c | c | c | } 
\hline \text { Periods } & \text { Present Value af } \$ 1 \text { at } 7 \text { Percent } & \text { Present Value af Ordinary Annuity of } \
&&\text { \$1 at } 7 \text { Percent } \
1 & 0.935 & 0.935 \
\hline 2 & 0.873 & 1.808 \
\hline 3 & 0.816 & 2.624 \
\hline
\end{array}$$
 What is the present value of receiving $400 at the end of each year for three years?

Accepted Answer

A)  $1,122.00 
B)  $326.40 
C)  $979.20 
D)  $1,049.60 
A)  $1,122.00 
B)  $326.40 
C)  $979.20 
D)  $1,049.60 D

Question 4

Commercial paper consists of secured loans that are sold to the public.

Accepted Answer

A) True 
 B)False

Question 5

Both the employee and the employer must bear the tax burden for unemployment benefits.

Accepted Answer

A) True 
 B)False

Question 6

Use this information to answer the following question. $$\begin{array} { | c | c | c | } 
\hline \text { Periods } & \text { Future Value af } 11 \text { at } 12 \text { Percent } & \text { Future Value af Ordinary Annuity of } \
& & \text { \$1 at } 12 \text { Percent } \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$$ A deposit of $2,700 made at the end of each year for three years would grow to how much?

Accepted Answer

A)  $3,793.50 
B)  $9,109.80 
C)  $8,100.00 
D)  $9,072.00 
A)  $3,793.50 
B)  $9,109.80 
C)  $8,100.00 
D)  $9,072.00

Question 7

There is no limit to the amount of income subject to the Medicare tax.

Accepted Answer

A) True 
 B)False

Question 8

Payroll Taxes and Benefits Expense includes all of the following except

Accepted Answer

A)  federal income taxes. 
B)  social security taxes. 
C)  Medicare taxes. 
D)  unemployment taxes. 
A)  federal income taxes. 
B)  social security taxes. 
C)  Medicare taxes. 
D)  unemployment taxes.

Question 9

The theoretical value of an asset is the present value of the expected benefits.

Accepted Answer

A) True 
 B)False

Question 10

Match between columns
                        Premises:  Parking lots
 Electricity used by equipment
 Sewage system cost
 Interest on building construction loan
 Cost of trial runs for equipment
 Drainage costs
 Cost to install equipment
 Fences
 Unpaid (past) property taxes assumed
 Cost of tearing down a building when land and a building on it are purchased

Accepted Answer

The Answer of land (L) and land improvements (LI) and is...

Question 11

A company wishes to make deposits at the end of each of the next four years to accumulate a fund of $60,000.The annual contributions equal $60,000 multiplied by the appropriate present value of an ordinary annuity factor.

Accepted Answer

A) True 
 B)False

Question 12

Promotional costs,such as coupons and rebates,should be recorded as an expense with a related liability.

Accepted Answer

A) True 
 B)False

Question 13

An estimated liability is not a definite obligation of the firm because the amount cannot be definitely determined.

Accepted Answer

A) True 
 B)False

Question 14

A customer is injured using a company's product.The potential liability that may result is called a(n)

Accepted Answer

A)  contingent liability. 
B)  estimated liability. 
C)  definitely determinable liability. 
D)  estimated warranty liability. 
A)  contingent liability. 
B)  estimated liability. 
C)  definitely determinable liability. 
D)  estimated warranty liability.

Question 15

Which of the following is a tax borne by the employer but not the employee?

Accepted Answer

A)  State income tax 
B)  FUTA tax 
C)  Medicare tax 
D)  Social security tax 
A)  State income tax 
B)  FUTA tax 
C)  Medicare tax 
D)  Social security tax

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Contrast the accounting problems presented by definitely determinable liabilities and those associated with estimated liabilities.

Accepted Answer

Definitely determinable liabilities requ

Question 18

The most common examples of commitments are leases and purchase agreements.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Calculate answers to the following questions using future value and/or present value tables.
a. Tally purchased machinery by executing a $30,000 non-interest-bearing note due in four years. For how much should the machinery be recorded, assuming that the going rate for similar notes is 6 percent?
b. Mindy Kwon is making bank deposits of $3,000 at the end of each year for five years, for purposes of buying a car. Assuming an interest rate of 7 percent, how expensive car will she be able to purchase?
c. To how much will $2,000 grow, assuming it is invested for 2-1/2 years, with interest of 8 percent, compounded quarterly?
d. Liz Astor would like to make a lump-sum deposit today so that she can withdraw $10,000 at the end of each year for the next three years. Assuming a 9 percent interest rate, what should she invest today?

Accepted Answer

a.$23,760 [30,000 * .792 (PV o

Exam 8: Current Liabilities and Fair Value Accounting

The annual interest earned on an amount deposited into a bank account will be the same each year when compound interest is used.

Gross earnings minus deductions equals take-home pay.

Use this information to answer the following question. Periods Present Value af \ 1 at 7 Percent Present Value af Ordinary Annuity of \1 at 7 Percent 1 0.935 0.935 2 0.873 1.808 3 0.816 2.624 What is the present value of receiving $400 at the end of each year for three years?

Commercial paper consists of secured loans that are sold to the public.

Both the employee and the employer must bear the tax burden for unemployment benefits.

Use this information to answer the following question. Periods Future Value af 11 at 12 Percent Future Value af Ordinary Annuity of \1 at 12 Percent 1 1.120 1.000 2 1.254 2.120 3 1.405 3.374 A deposit of $2,700 made at the end of each year for three years would grow to how much?

There is no limit to the amount of income subject to the Medicare tax.

Payroll Taxes and Benefits Expense includes all of the following except

The theoretical value of an asset is the present value of the expected benefits.

A company wishes to make deposits at the end of each of the next four years to accumulate a fund of $60,000.The annual contributions equal $60,000 multiplied by the appropriate present value of an ordinary annuity factor.

Promotional costs,such as coupons and rebates,should be recorded as an expense with a related liability.

An estimated liability is not a definite obligation of the firm because the amount cannot be definitely determined.

A customer is injured using a company's product.The potential liability that may result is called a(n)

Which of the following is a tax borne by the employer but not the employee?

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

Contrast the accounting problems presented by definitely determinable liabilities and those associated with estimated liabilities.

The most common examples of commitments are leases and purchase agreements.

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

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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