Question 1

The higher the interest rate assumed,the

Accepted Answer

A)  higher the present value of an ordinary annuity. 
B)  more one must deposit today to accumulate to a desired sum. 
C)  lower the future value of a sum invested in the bank today. 
D)  lower the present value of a sum due in the future. 
A)  higher the present value of an ordinary annuity. 
B)  more one must deposit today to accumulate to a desired sum. 
C)  lower the future value of a sum invested in the bank today. 
D)  lower the present value of a sum due in the future.

Question 2

Which of the following typically would not be done to satisfy a current liability?

Accepted Answer

A)  Use long-term assets to satisfy the liability 
B)  Render a service to satisfy the liability 
C)  Use current assets to satisfy the liability 
D)  Take on another current liability to satisfy the liability 
A)  Use long-term assets to satisfy the liability 
B)  Render a service to satisfy the liability 
C)  Use current assets to satisfy the liability 
D)  Take on another current liability to satisfy the liability

Question 3

Hatley Corporation borrowed $10 million to finance the construction of a new building.In addition to the annual interest that is not included in the face,one-tenth of the principal amount borrowed is to be repaid each year.If the borrowing occurred one month prior to year end,how should the loan be presented on the upcoming balance sheet?

Accepted Answer

Nine million dollars of the loan should

Question 4

Product warranties are an expense of the period in which the related product is sold.

Accepted Answer

A) True 
 B)False

Question 5

Use this information to answer the following question. $\begin{array}{lrlr}
\text { Gross payroll } & \$ 16,000 & \text { Federal income taxes withheld } & \$ 1,800 \
\text { Social security and Medicare rate } & 7.65 \% & \text { Federal unemployment tax rate } & .8 \%\
\
\text { State unemployment tax rate}&5.4 \%
\end{array}$

The entry to record the payroll taxes expense would include a credit to

Accepted Answer

A)  Salaries Payable. 
B)  Federal Income Taxes Payable. 
C)  Social Security Tax Payable. 
D)  Cash. 
A)  Salaries Payable. 
B)  Federal Income Taxes Payable. 
C)  Social Security Tax Payable. 
D)  Cash.

Question 6

To determine the payables turnover,one first calculates the days' payable.

Accepted Answer

A) True 
 B)False

Question 7

Calculate answers to the following questions:
a. To what amount will an $800 deposit grow, assuming 9 percent annual interest, five years, and simple interest?
b. To what amount will a $500 deposit grow, assuming 10 percent annual interest paid semiannually, three years, and simple interest?

Accepted Answer

a.$1,160[($800 * .09

Question 8

During July,Audio City sold 200 radios for $50 each.Each radio had cost Audio City $30 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July,the entry to record the Product Warranty Expense is:

Accepted Answer

A)  
$\begin{array}{llr}
  \text {  Product Warranty Expense} &30\
 \text {Estimated Product Warranty Liability  } &&30\ 
\end{array}$ 
B)  
$\begin{array}{l}
\text { Product Warranty Expense } & 150\
\text { Cash }&&150
\end{array}$ 
C)  
$\begin{array}{llr}
  \text { Product Warranty Expense } &300\
 \text {  Estimated Product Warranty Liability} &&300\
\end{array}$ 
D)  
$\begin{array}{llr}
  \text { Estimated Product Warranty Liability  } &600\
 \text {  Product Warranty Expense } &&600\
\end{array}$ 
A)  
$\begin{array}{llr}
  \text {  Product Warranty Expense} &30\
 \text {Estimated Product Warranty Liability  } &&30\ 
\end{array}$ 
B)  
$\begin{array}{l}
\text { Product Warranty Expense } & 150\
\text { Cash }&&150
\end{array}$ 
C)  
$\begin{array}{llr}
  \text { Product Warranty Expense } &300\
 \text {  Estimated Product Warranty Liability} &&300\
\end{array}$ 
D)  
$\begin{array}{llr}
  \text { Estimated Product Warranty Liability  } &600\
 \text {  Product Warranty Expense } &&600\
\end{array}$

Question 9

Lee Provo is paid $8 per hour,plus time-and-one-half for hours over 40 for a given week.During the week of January 21,Provo worked 46 hours.Social security taxes are 6.2 percent,Medicare taxes are 1.45 percent,$50 is withheld for federal income taxes,$12 is withheld for state income taxes,and $15 is withheld for medical insurance.In addition,Provo's employer must pay social security taxes of 6.2 percent,Medicare taxes of 1.45 percent,state unemployment taxes of 5.4 percent,and federal unemployment taxes of .8 percent.Calculate (a)Provo's gross earnings,(b)Provo's take-home pay,(c)the employer's payroll taxes expense,and (d)the total cost of employing Provo for the week.Round all amounts to the nearest penny.

Accepted Answer

a.$392.00 [(40 * $8)+ (6 * $12

Question 10

Use this information to answer the following question. $$\begin{array} { | c | c | c | } 
\hline \text { Periods } & \text { Present Value af } \$ 1 \text { at } 7 \text { Percent } & \text { Present Value af Ordinary Annuity of } \
&&\text { \$1 at } 7 \text { Percent } \
1 & 0.935 & 0.935 \
\hline 2 & 0.873 & 1.808 \
\hline 3 & 0.816 & 2.624 \
\hline
\end{array}$$
 If $100 is invested,how much will it grow to at the end of the three years?

Accepted Answer

A)  $100 * .935 * 3 
B)  $100 ÷ .816 
C)  ($100 ÷ 2.624) * 3 
D)  $100 * 2.624 
A)  $100 * .935 * 3 
B)  $100 ÷ .816 
C)  ($100 ÷ 2.624) * 3 
D)  $100 * 2.624

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following businesses most likely would have a large Unearned Revenue account balance at all times?

Accepted Answer

A)  Dry cleaners 
B)  Realtor 
C)  Magazine publisher 
D)  Department store 
A)  Dry cleaners 
B)  Realtor 
C)  Magazine publisher 
D)  Department store

Question 13

Unearned revenue arises from the acceptance of payment in advance for a service to be performed.

Accepted Answer

A) True 
 B)False

Question 14

Future value refers to an amount received or paid now at a given rate of interest that is equivalent to another amount received or paid sometime in the future.

Accepted Answer

A) True 
 B)False

Question 15

Anson's Auto Parts had cash sales of $10,000 for the month of April.Sales are subject to a 6 1/2 percent sales tax and an 8 percent excise tax.In the journal provided,prepare a compound entry without explanation to record Anson's Auto Parts sales and related sales and excise taxes for the month.

Accepted Answer

The answer of Anson's Auto Parts had cash sales of...

Question 16

Usually,failure to record a liability means failure to record a(n)

Accepted Answer

A)  revenue. 
B)  note. 
C)  expense. 
D)  asset. 
A)  revenue. 
B)  note. 
C)  expense. 
D)  asset.

Question 17

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

Accepted Answer

A) True 
 B)False

Question 18

A contingent liability is best described as a(n)

Accepted Answer

A)  current liability. 
B)  probable liability. 
C)  potential liability. 
D)  estimated liability. 
A)  current liability. 
B)  probable liability. 
C)  potential liability. 
D)  estimated liability.

Question 19

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.

Accepted Answer

a.$683[($1,000 * .683 (PV of $

Question 20

Calculate answers to the following questions using future value and/or present value tables.Round amounts to the nearest dollar.
a. What is the present value of receiving $1,000 at the end of each year for six years, assuming 7 percent interest compounded annually?
b. What amount must be deposited at the bank today to grow to $300 in five years, assuming 14 percent interest compounded semiannually?

Accepted Answer

a.$4,767[($1,000 * 4

Exam 8: Current Liabilities and Fair Value Accounting

The higher the interest rate assumed,the

Which of the following typically would not be done to satisfy a current liability?

Product warranties are an expense of the period in which the related product is sold.

Use this information to answer the following question. Gross payroll \ 16,000 Federal income taxes withheld \ 1,800 Social security and Medicare rate 7.65\% Federal unemployment tax rate .8\% State unemployment tax rate 5.4\% The entry to record the payroll taxes expense would include a credit to

To determine the payables turnover,one first calculates the days' payable.

Calculate answers to the following questions: a. To what amount will an $800 deposit grow, assuming 9 percent annual interest, five years, and simple interest? b. To what amount will a $500 deposit grow, assuming 10 percent annual interest paid semiannually, three years, and simple interest?

During July,Audio City sold 200 radios for $50 each.Each radio had cost Audio City $30 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July,the entry to record the Product Warranty Expense is:

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 If $100 is invested,how much will it grow to at the end of the three years?

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

Which of the following businesses most likely would have a large Unearned Revenue account balance at all times?

Unearned revenue arises from the acceptance of payment in advance for a service to be performed.

Future value refers to an amount received or paid now at a given rate of interest that is equivalent to another amount received or paid sometime in the future.

Anson's Auto Parts had cash sales of $10,000 for the month of April.Sales are subject to a 6 1/2 percent sales tax and an 8 percent excise tax.In the journal provided,prepare a compound entry without explanation to record Anson's Auto Parts sales and related sales and excise taxes for the month.

Usually,failure to record a liability means failure to record a(n)

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

A contingent liability is best described as a(n)

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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