Question 1

Which of the following descriptions would not fit the definition of a liability?

Accepted Answer

A)  Obligation to deliver services already paid for 
B)  Result of past transaction 
C)  Future obligation for future salary payments 
D)  Present obligation for future payment 
A)  Obligation to deliver services already paid for 
B)  Result of past transaction 
C)  Future obligation for future salary payments 
D)  Present obligation for future payment

Question 2

Failure to record a liability probably will

Accepted Answer

A)  result in an overstated net income. 
B)  result in overstated total liabilities and stockholders' equity. 
C)  have no effect on net income. 
D)  result in overstated total assets. 
A)  result in an overstated net income. 
B)  result in overstated total liabilities and stockholders' equity. 
C)  have no effect on net income. 
D)  result in overstated total assets.

Question 3

All factors in a present value of a single sum table are less than 1.000.

Accepted Answer

A) True 
 B)False

Question 4

The lower the interest rate,the lower the future value factor.

Accepted Answer

A) True 
 B)False

Question 5

Because failure to record a liability generally leads to failure to record an expense,it usually results in an overstatement of income.

Accepted Answer

A) True 
 B)False

Question 6

For notes payable whose interest is stated separately,the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.

Accepted Answer

A) True 
 B)False

Question 7

Use this information to answer the following question. The following totals for the month of November were taken from the payroll register of Levine Company:
$\begin{array}{llr}
  \text {Salaries expense  } &\$12,000\
 \text { Social security and Medicare taxes withheld } &550\
 \text {  Income taxes withheld} &2,500\
 \text { Medical insurance deductions } &250\
 \text {  Life insurance deductions} &200\
 \text { Salaries subiect to federal and state unemployment taxes of 6.2 percent } &4,000\
\end{array}$

The entry to record the accrual of federal unemployment tax (assume FUTA tax of .8 percent)would include a

Accepted Answer

A)  credit to Federal Unemployment Tax Payable for $32. 
B)  debit to Federal Unemployment Tax Payable for $32. 
C)  debit to FUTA Tax Expense for $32. 
D)  credit to Payroll Taxes and Benefits Expense for $32. 
A)  credit to Federal Unemployment Tax Payable for $32. 
B)  debit to Federal Unemployment Tax Payable for $32. 
C)  debit to FUTA Tax Expense for $32. 
D)  credit to Payroll Taxes and Benefits Expense for $32.

Question 8

Explain why the cost of employing someone is more than just the wage or salary paid to the employee.

Accepted Answer

The cost of employing an individual incl

Question 9

Potential vacation pay should be accounted for as a commitment.

Accepted Answer

A) True 
 B)False

Question 10

Prepare journal entries without explanations for the following transactions involving notes payable for Gomez Company,whose fiscal year ends June 30.
 $\begin{array}{|l|l|l|}
\hline \text { June } & 20& \begin{array}{c}
\text { Paid a trade account payable with a } 90 \text {-day, } 9 \text { percent } \$ 60,000 \text { note. Interest is } \
\text { in addition to the face value. }
\end{array} \
\hline & 30& \text { Made end-of-year adjusting entry to accrue interest expense for the note. } \
\hline & 30 &\text { Made end-of-year closing entry pertaining to interest expense. } \
\hline \text { Sept. } & 18 &\text { Paid amount due on note, plus interest. }\
\hline
\end{array}$

Accepted Answer

The answer of Prepare journal entries without explanations for the...

Question 11

All of the following are estimated liabilities except

Accepted Answer

A)  liability for vacation pay. 
B)  payroll liabilities. 
C)  product warranty liability. 
D)  property tax liability. 
A)  liability for vacation pay. 
B)  payroll liabilities. 
C)  product warranty liability. 
D)  property tax liability.

Question 12

Ronald Company has current assets of $115,000 and current liabilities of $75,000 of which accounts payable are $65,000.Arnold's cost of goods sold is $420,000,its merchandise inventory increased by $20,000,and accounts payable were $45,000 the prior year.Calculate Ronald's working capital,payables turnover,and days' payable.

Accepted Answer

Working Capital = Current Assets - Curre

Question 13

Liabilities generally arise from past transactions.

Accepted Answer

A) True 
 B)False

Question 14

Purchase agreements are

Accepted Answer

A)  estimates. 
B)  commitments. 
C)  liabilities. 
D)  contingencies. 
A)  estimates. 
B)  commitments. 
C)  liabilities. 
D)  contingencies.

Question 15

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest.The future value table is used by multiplying the $700 by which factor?

Accepted Answer

A)  28 periods at 3 percent 
B)  7 periods at 3 percent 
C)  7 periods at 12 percent 
D)  28 periods at 7 percent 
A)  28 periods at 3 percent 
B)  7 periods at 3 percent 
C)  7 periods at 12 percent 
D)  28 periods at 7 percent

Question 16

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 amount must be deposited today so that $600 may be withdrawn at the end of each year for three years?

Accepted Answer

A)  $1,800.00 
B)  $1,925.14 
C)  $1,574.40 
D)  $1,683.00 
A)  $1,800.00 
B)  $1,925.14 
C)  $1,574.40 
D)  $1,683.00

Question 17

The entry that includes a debit to Payroll Taxes and Benefits Expense also includes credits to Federal Unemployment Tax Payable and State Unemployment Tax Payable.

Accepted Answer

A) True 
 B)False

Question 18

A liability is recognized when

Accepted Answer

A)  the exact due date is known. 
B)  it is paid for. 
C)  an obligation has arisen. 
D)  the exact amount of the liability is known. 
A)  the exact due date is known. 
B)  it is paid for. 
C)  an obligation has arisen. 
D)  the exact amount of the liability is known.

Question 19

Match between columns
                        Premises:  Clearing costs
 Driveway cost
 Computer installation cost
 Architect's fee for building plans
 Surveying costs
 Cost of assembly line trial run
 Property taxes paid after purchase
 Grading costs
 Insurance and freight on computer purchased
 Cost of lighting for parking lot
 Landscaping cost
 Material and labor costs incurred to construct factory
 Cost of tearing down a warehouse on land just purchased
 Utilities cost during first year
 Cost of building wing
 Sales tax on file cabinets purchased
 Real estate commissions on land purchased
 Contractor's fee for building construction
 Cost to put up chain-link fence
 Accrued taxes on land purchased

Accepted Answer

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

Question 20

At the time a company signs a contract to pay an employee a certain salary in the future,it records a liability.

Accepted Answer

A) True 
 B)False

Exam 8: Current Liabilities and Fair Value Accounting

Which of the following descriptions would not fit the definition of a liability?

Failure to record a liability probably will

All factors in a present value of a single sum table are less than 1.000.

The lower the interest rate,the lower the future value factor.

Because failure to record a liability generally leads to failure to record an expense,it usually results in an overstatement of income.

For notes payable whose interest is stated separately,the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.

Explain why the cost of employing someone is more than just the wage or salary paid to the employee.

Potential vacation pay should be accounted for as a commitment.

All of the following are estimated liabilities except

Liabilities generally arise from past transactions.

Purchase agreements are

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest.The future value table is used by multiplying the $700 by which factor?

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 amount must be deposited today so that $600 may be withdrawn at the end of each year for three years?

The entry that includes a debit to Payroll Taxes and Benefits Expense also includes credits to Federal Unemployment Tax Payable and State Unemployment Tax Payable.

A liability is recognized when

At the time a company signs a contract to pay an employee a certain salary in the future,it records a liability.

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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