Question 1

A contingent liability is recorded in the accounting records

Accepted Answer

A)  if the contingency has not been described already in the notes to the financial statements. 
B)  if it possibly will become an actual liability and the exact amount is known. 
C)  under no circumstances. 
D)  if it probably will become an actual liability and the amount can be reasonably estimated. 
A)  if the contingency has not been described already in the notes to the financial statements. 
B)  if it possibly will become an actual liability and the exact amount is known. 
C)  under no circumstances. 
D)  if it probably will become an actual liability and the amount can be reasonably estimated.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

The payables turnover is measured

Accepted Answer

A)  in days. 
B)  as a percentage. 
C)  in dollars. 
D)  in times. 
A)  in days. 
B)  as a percentage. 
C)  in dollars. 
D)  in times.

Question 4

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 5

On December 1,Boston Pizza borrowed $40,000 from the bank,issuing a 90-day,15 percent promissory note.Interest is in addition to the face value.In the journal provided,prepare Boston Pizza's December 1 entry,December 31 adjusting entry without explanation for accrued interest,and March 1 entry at maturity.Round to the nearest whole dollar.

Accepted Answer

The answer of On December 1,Boston Pizza borrowed $40,000 from...

Question 6

You win the grand prize and can choose between receiving $100,000 today or $20,000 per year for seven years.Ignoring income taxes,how would you go about making your decision?

Accepted Answer

The present value of the $20,000 annuity

Question 7

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 8

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 @#LAT-DLM& 4.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

All factors in a future value table must be greater than or equal to 1.000.

Accepted Answer

A) True 
 B)False

Question 11

Property Taxes Expense is recorded only in the month it is paid.

Accepted Answer

A) True 
 B)False

Question 12

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 @#LAT-DLM& .683 (PV of $1

Question 13

Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}
\text { Future Value of Ordinary Annuity of } \
\$ 1 \text { at } 12 \text { Percent }
\end{array} \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$
 If an accumulation of $6,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years?

Accepted Answer

A)  $1,778.30 
B)  $20,244.00 
C)  $4,270.46 
D)  $8,430.00 
A)  $1,778.30 
B)  $20,244.00 
C)  $4,270.46 
D)  $8,430.00

Question 14

All of the following are measures of liquidity except

Accepted Answer

A)  the quick ratio. 
B)  return on assets. 
C)  the current ratio. 
D)  working capital. 
A)  the quick ratio. 
B)  return on assets. 
C)  the current ratio. 
D)  working capital.

Question 15

Gross earnings minus deductions equals take-home pay.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline\text { Periods } & \text { Present Value of } \$ 1 \text { at } 7 \text { Percent } & \text { Present Value of Ordinary Annuity of } \
&&\$ 1 \text { at } 7 \text { Percent }\
\hline 1 & 0.935 & 0.935 \
\hline 2 & 0.873 & 1.808 \
\hline 3 & 0.816 & 2.624 \
\hline
\end{array}$
 What amount must be deposited today to grow to $450 in three years?

Accepted Answer

A)  $331.00 
B)  $367.20 
C)  $171.49 
D)  $420.75 
A)  $331.00 
B)  $367.20 
C)  $171.49 
D)  $420.75

Question 19

If an accrued liability for salaries is not recorded,income for the following period will be overstated.

Accepted Answer

A) True 
 B)False

Question 20

The payables turnover is the number of times,on average,that accounts payable are paid in an accounting period.

Accepted Answer

A) True 
 B)False

Exam 8: Current Liabilities and Fair Value Accounting

A contingent liability is recorded in the accounting records

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

The payables turnover is measured

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

You win the grand prize and can choose between receiving $100,000 today or $20,000 per year for seven years.Ignoring income taxes,how would you go about making your decision?

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

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

All factors in a future value table must be greater than or equal to 1.000.

Property Taxes Expense is recorded only in the month it is paid.

All of the following are measures of liquidity except

Gross earnings minus deductions equals take-home pay.

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

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

Use this information to answer the following question. Periods Present Value of \ 1 at 7 Percent Present Value of 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 to grow to $450 in three years?

If an accrued liability for salaries is not recorded,income for the following period will be overstated.

The payables turnover is the number of times,on average,that accounts payable are paid in an accounting period.

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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