Question 1

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 2

An ordinary annuity is a series of equal payments made at the end of equal intervals of time.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Vacation pay is charged properly as an expense in the month in which the employee takes a vacation.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A contingent liability is recognized when the amount can be reasonably estimated and the likelihood of loss is probable.

Accepted Answer

A) True 
 B)False

Question 7

Heidi wishes to deposit an amount into her savings account that will enable her to withdraw $800 per year for the next four years.She should deposit $800,multiplied by the

Accepted Answer

A)  present value of a single sum factor. 
B)  present value of an ordinary annuity factor. 
C)  future value of a single sum factor. 
D)  future value of an ordinary annuity factor. 
A)  present value of a single sum factor. 
B)  present value of an ordinary annuity factor. 
C)  future value of a single sum factor. 
D)  future value of an ordinary annuity factor.

Question 8

All of the following are classified as definitely determinable liabilities except

Accepted Answer

A)  sales tax payable. 
B)  estimated property tax payable. 
C)  the current portion of long-term debt. 
D)  unearned revenue. 
A)  sales tax payable. 
B)  estimated property tax payable. 
C)  the current portion of long-term debt. 
D)  unearned revenue.

Question 9

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

Question 10

Darla Katz earns an hourly wage of $12,with time-and-a-half pay for hours worked over 40 per week.During the most recent week,she worked 46 hours,her federal tax withholding totaled $62,her state tax withholding totaled $18,and $3 was withheld for union dues.Assuming a 6.2 percent social security tax rate and a 1.45 percent Medicare tax rate,prepare the entry without explanation in the journal provided to record Katz's wages and related liabilities.Round to the nearest penny.

Accepted Answer

The answer of Darla Katz earns an hourly wage of...

Question 11

Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}
\text { Future Value of Ordinary Annuity of } \
\$ 1 \text { at } 12 \text { Percent }
\end{array} \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$
 A single deposit of $2,000 made at the beginning of period 1 would grow to how much at the end of three years?

Accepted Answer

A)  $2,240.00 
B)  $2,810.00 
C)  $2,508.00 
D)  $6,748.00 
A)  $2,240.00 
B)  $2,810.00 
C)  $2,508.00 
D)  $6,748.00

Question 12

A company receives $100,of which $4 is for sales tax and $6 is for excise tax.The journal entry to record the sale is:

Accepted Answer

A)  Cash 90
Sales 90 
B)  Excise Tax expense 6
Sales Tax expense 4
Cash 90
Sales 100 
C)  Sales 100
Cash 100 
D)  Cash 100
Sales Tax Payable 4
Excise tax payable 6
Sales 90 
A)  Cash 90
Sales 90 
B)  Excise Tax expense 6
Sales Tax expense 4
Cash 90
Sales 100 
C)  Sales 100
Cash 100 
D)  Cash 100
Sales Tax Payable 4
Excise tax payable 6
Sales 90

Question 13

A commitment is a legal obligation that does not meet the technical requirements for recognition as a liability.

Accepted Answer

A) True 
 B)False

Question 14

Use this information to answer the following question. The transactions below pertain to Broyer Company,whose fiscal year ends September 30.
Sept. 10 Received cash for a 90-day, 12 percent, $ \$ 25,000 $ note payable. Interest is in adclition to the face value.
30 Made end-of-year adjusting entry to accrue interest expense.
 The entry to record the September 10 transaction (amounts rounded)is:

Accepted Answer

A)  Cash 740
Notes Payable 740 
B)  Cash 24,260
Accounts receivable 24,260 
C)  Cash 24,260
Notes Payable 24,260 
D)  Cash 25,000
Notes Payable 25,000 
A)  Cash 740
Notes Payable 740 
B)  Cash 24,260
Accounts receivable 24,260 
C)  Cash 24,260
Notes Payable 24,260 
D)  Cash 25,000
Notes Payable 25,000

Question 15

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 16

Which of the following taxes is not subject to a maximum amount per employee per year?

Accepted Answer

A)  State unemployment tax 
B)  Federal unemployment tax 
C)  Social security tax 
D)  Medicare tax 
A)  State unemployment tax 
B)  Federal unemployment tax 
C)  Social security tax 
D)  Medicare tax

Question 17

The higher the interest rate,the lower the present value factor.

Accepted Answer

A) True 
 B)False

Question 18

A business accepts a 9 percent,$25,000 note due in 120 days.Assuming simple interest,how much (amount rounded)will the business receive when the note falls due?

Accepted Answer

A)  $25,000 
B)  $25,075 
C)  $25,740 
D)  $27,260 
A)  $25,000 
B)  $25,075 
C)  $25,740 
D)  $27,260

Question 19

The owner of an amusement park is considering installing a new ride.The ride would cost $10,000,produce a net cash flow of $1,250 annually,and last for nine years.
a. Assuming an interest rate of 10 percent, what is the present value of the net cash flows expected from the ride? Use future value and/or present value tables in calculating your answer. Round amounts to the nearest dollar.
b. Should the ride be purchased?

Accepted Answer

a.$7,199 [($1,250 @#LAT-DLM& 5

Question 20

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

Exam 8: Current Liabilities and Fair Value Accounting

A contingent liability is best described as a(n)

An ordinary annuity is a series of equal payments made at the end of equal intervals of time.

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

Vacation pay is charged properly as an expense in the month in which the employee takes a vacation.

A contingent liability is recognized when the amount can be reasonably estimated and the likelihood of loss is probable.

Heidi wishes to deposit an amount into her savings account that will enable her to withdraw $800 per year for the next four years.She should deposit $800,multiplied by the

All of the following are classified as definitely determinable liabilities except

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

A company receives $100,of which $4 is for sales tax and $6 is for excise tax.The journal entry to record the sale is:

A commitment is a legal obligation that does not meet the technical requirements for recognition as a liability.

The higher the interest rate assumed,the

Which of the following taxes is not subject to a maximum amount per employee per year?

The higher the interest rate,the lower the present value factor.

A business accepts a 9 percent,$25,000 note due in 120 days.Assuming simple interest,how much (amount rounded)will the business receive when the note falls due?

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.

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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