Question 1

The amount of property tax payable is usually an estimated liability for a portion of the year.

Accepted Answer

A) True 
 B)False  True

Question 2

A contingent liability eventually becomes either a true liability or no liability at all.

Accepted Answer

A) True 
 B)False  True

Question 3

Lawsuits against a company in connection with an industrial accident would not be disclosed in the notes to the financial statements as a contingent liability until the lawsuits have been settled.

Accepted Answer

A) True 
 B)False  False

Question 4

Liabilities that might arise from which of the following probably would be disclosed only in the notes to the financial statements?

Accepted Answer

A)  Possible warranty claims 
B)  Guarantees of the debt of other companies 
C)  Possible bankruptcy of an important customer 
D)  Estimated income taxes for the current year 
A)  Possible warranty claims 
B)  Guarantees of the debt of other companies 
C)  Possible bankruptcy of an important customer 
D)  Estimated income taxes for the current year

Question 5

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

Accepted Answer

Definitely determinable liabilities requ

Question 6

Commercial paper normally is issued by companies with poor credit ratings.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true regarding the time value of money?

Accepted Answer

A)  Compound interest will produce equal amounts of interest each period on a fixed deposit. 
B)  Earning simple interest is more beneficial than earning compound interest. 
C)  When making a purchase, it is better to make payment as soon as possible. 
D)  It is better to receive $1 now than a year from now. 
A)  Compound interest will produce equal amounts of interest each period on a fixed deposit. 
B)  Earning simple interest is more beneficial than earning compound interest. 
C)  When making a purchase, it is better to make payment as soon as possible. 
D)  It is better to receive $1 now than a year from now.

Question 8

The future value of an ordinary annuity table would not include the factor

Accepted Answer

A)  0.909. 
B)  2.010. 
C)  20.300. 
D)  1.000. 
A)  0.909. 
B)  2.010. 
C)  20.300. 
D)  1.000.

Question 9

A contingent liability is not entered into the accounting records under any circumstances.

Accepted Answer

A) True 
 B)False

Question 10

All of the following can be employee payroll withholdings except

Accepted Answer

A)  state income taxes. 
B)  medical insurance premium payments. 
C)  charitable contributions. 
D)  federal unemployment tax. 
A)  state income taxes. 
B)  medical insurance premium payments. 
C)  charitable contributions. 
D)  federal unemployment tax.

Question 11

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 12

The costs associated with coupons and rebates are usually reflected in contra-revenue accounts.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following most likely would be classified as a current liability?

Accepted Answer

A)  Mortgage payable 
B)  Dividends payable 
C)  Five-year notes payable 
D)  Bonds payable 
A)  Mortgage payable 
B)  Dividends payable 
C)  Five-year notes payable 
D)  Bonds payable

Question 14

Social security and Medicare taxes are borne entirely by the employer.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

A company sells merchandise on a deferred payment plan,ultimately receiving $5,000 on the account receivable.On the payment date,the company would

Accepted Answer

A)  credit Accounts Receivable for less than $5,000. 
B)  debit Interest Income for the imputed amount. 
C)  credit Sales for less than $5,000. 
D)  debit the asset account for $5,000. 
A)  credit Accounts Receivable for less than $5,000. 
B)  debit Interest Income for the imputed amount. 
C)  credit Sales for less than $5,000. 
D)  debit the asset account for $5,000.

Question 18

The closing entry that would be made at the yearend transferring the interest expense of $50 on a note is:

Accepted Answer

A) 
$\begin{array}{llr}
  \text {Interest Expense  } &50\
 \text { Notes payable } &&50\
\end{array}$ 
B) 
$\begin{array}{c}
\text { Interest Expense } &50\
\text { Income Summary }&&50
\end{array}$ 
C) 
$\begin{array}{c}
\text { Income Summary } &50 \
\text { Interest Expense }& &50
\end{array}$ 
D) 
$\begin{array}{c}
\text { Notes payable } &50\
\text { Interest Expense }&&50
\end{array}$ 
A) 
$\begin{array}{llr}
  \text {Interest Expense  } &50\
 \text { Notes payable } &&50\
\end{array}$ 
B) 
$\begin{array}{c}
\text { Interest Expense } &50\
\text { Income Summary }&&50
\end{array}$ 
C) 
$\begin{array}{c}
\text { Income Summary } &50 \
\text { Interest Expense }& &50
\end{array}$ 
D) 
$\begin{array}{c}
\text { Notes payable } &50\
\text { Interest Expense }&&50
\end{array}$

Question 19

Of a company's employees,75 percent typically qualify to receive two weeks' paid vacation out of 50 working weeks per year.The entry to record the amount of estimated liability for vacation pay for a week in which the total payroll is $9,600 :

Accepted Answer

A) 
$\begin{array}{llr}
  \text { Estimated Liability for Vacation Pay  } &144 \
 \text { Cash } &&144\
\end{array}$ 
B) 
$\begin{array}{l}
\text { Vacation Pay Expense } &288\
\text { Estimated Liability for Vacation Pay }&&288
\end{array}$ 
C) 
$\begin{array}{l}
\text { Vacation Pay Expense }&7,200 \
\text { Cash }&&7,200
\end{array}$ 
D) 
$\begin{array}{llr}
  \text {Cash  } &256\
 \text { Estimated Liability for Vacation Pay } &&256\
\end{array}$ 
A) 
$\begin{array}{llr}
  \text { Estimated Liability for Vacation Pay  } &144 \
 \text { Cash } &&144\
\end{array}$ 
B) 
$\begin{array}{l}
\text { Vacation Pay Expense } &288\
\text { Estimated Liability for Vacation Pay }&&288
\end{array}$ 
C) 
$\begin{array}{l}
\text { Vacation Pay Expense }&7,200 \
\text { Cash }&&7,200
\end{array}$ 
D) 
$\begin{array}{llr}
  \text {Cash  } &256\
 \text { Estimated Liability for Vacation Pay } &&256\
\end{array}$

Question 20

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 and land improvements and buildings and is...

Exam 8: Current Liabilities and Fair Value Accounting

The amount of property tax payable is usually an estimated liability for a portion of the year.

A contingent liability eventually becomes either a true liability or no liability at all.

Lawsuits against a company in connection with an industrial accident would not be disclosed in the notes to the financial statements as a contingent liability until the lawsuits have been settled.

Liabilities that might arise from which of the following probably would be disclosed only in the notes to the financial statements?

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

Commercial paper normally is issued by companies with poor credit ratings.

Which of the following statements is true regarding the time value of money?

The future value of an ordinary annuity table would not include the factor

A contingent liability is not entered into the accounting records under any circumstances.

All of the following can be employee payroll withholdings except

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.

The costs associated with coupons and rebates are usually reflected in contra-revenue accounts.

Which of the following most likely would be classified as a current liability?

Social security and Medicare taxes are borne entirely by the employer.

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

All of the following are estimated liabilities except

A company sells merchandise on a deferred payment plan,ultimately receiving $5,000 on the account receivable.On the payment date,the company would

The closing entry that would be made at the yearend transferring the interest expense of $50 on a note is:

Of a company's employees,75 percent typically qualify to receive two weeks' paid vacation out of 50 working weeks per year.The entry to record the amount of estimated liability for vacation pay for a week in which the total payroll is $9,600 :

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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