Question 1

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

Accepted Answer

A) True 
 B)False

Question 2

Interest expense is reported in the operating expense section of the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Medicare taxes are paid by both the employee and the employer.

Accepted Answer

A) True 
 B)False

Question 4

The current portion of long-term debt should

Accepted Answer

A) 
Be classified as a long-term liability 
B) 
Not be separated from the long-term portion of debt 
C) 
Be paid immediately 
D) 
Be reclassified as a current liability 
A) 
Be classified as a long-term liability 
B) 
Not be separated from the long-term portion of debt 
C) 
Be paid immediately 
D) 
Be reclassified as a current liability

Question 5

The accounting for defined benefit plans is usually very easy and straightforward.

Accepted Answer

A) True 
 B)False

Question 6

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Accepted Answer

A)  debit Cash; credit Accounts Payable 
B)  debit Accounts Payable; credit Cash 
C)  debit Cash; credit Notes Payable 
D)  debit Accounts Payable; credit Notes Payable 
A)  debit Cash; credit Accounts Payable 
B)  debit Accounts Payable; credit Cash 
C)  debit Cash; credit Notes Payable 
D)  debit Accounts Payable; credit Notes Payable

Question 7

The journal entry used to record the payment of a discounted note is

Accepted Answer

A)  debit Notes Payable and Interest Expense; credit Cash 
B)  debit Notes Payable; credit Cash 
C)  debit Cash; credit Notes Payable 
D)  debit Accounts Payable; credit Cash 
A)  debit Notes Payable and Interest Expense; credit Cash 
B)  debit Notes Payable; credit Cash 
C)  debit Cash; credit Notes Payable 
D)  debit Accounts Payable; credit Cash

Question 8

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

Accepted Answer

A) True 
 B)False

Question 9

Use the following key (a-d)to identify the proper treatment of each contingent liability.
-Event is remote and amount is not estimable

Accepted Answer

A) Record only 
B) Record and disclose 
C) Disclose only 
D) Do not record or disclose
   
A) Record only 
B) Record and disclose 
C) Disclose only 
D) Do not record or disclose

Question 10

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

Accepted Answer

A)  Rodriguez is the creditor and credits Accounts Receivable 
B)  Wilson is the creditor and debits Accounts Receivable 
C)  Wilson is the borrower and credits Accounts Payable 
D)  Rodriguez is the borrower and debits Accounts Payable 
A)  Rodriguez is the creditor and credits Accounts Receivable 
B)  Wilson is the creditor and debits Accounts Receivable 
C)  Wilson is the borrower and credits Accounts Payable 
D)  Rodriguez is the borrower and debits Accounts Payable

Question 11

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Assuming the social security rate is 6% and Medicare is 1.5%,and all earnings are subject to FICA taxes,what is Green's net pay?

Accepted Answer

The answer of Baker Green's weekly gross earnings for the...

Question 12

Quick assets include

Accepted Answer

A)  cash,cash equivalents,receivables,prepaid expenses,and inventory 
B)  cash,cash equivalents,receivables,and prepaid expenses 
C)  cash,cash equivalents,receivables,and inventory 
D)  cash,cash equivalents,and receivables 
A)  cash,cash equivalents,receivables,prepaid expenses,and inventory 
B)  cash,cash equivalents,receivables,and prepaid expenses 
C)  cash,cash equivalents,receivables,and inventory 
D)  cash,cash equivalents,and receivables

Question 13

Florida Keys Construction installs swimming pools.It calculates that warranty obligations are 3% of sales.For the year just ending,Florida Keys' sales were $1,450,000.Previous quarterly entries debiting Product Warranty Expense totaled $28,700.Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

Accepted Answer

Due to sales of $1,450,000,war

Question 14

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

Accepted Answer

A)  two-year notes payable 
B)  bonds payable 
C)  mortgage payable 
D)  unearned rent 
A)  two-year notes payable 
B)  bonds payable 
C)  mortgage payable 
D)  unearned rent

Question 15

Match the following terms or phrases in (a-g)with the explanations in 1-8.Terms or phrases may be used more than once.
-Remote contingent liability

Accepted Answer

A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements
   
A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Question 16

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

Accepted Answer

A) True 
 B)False

Question 17

A current liability is a debt that is reasonably expected to be paid

Accepted Answer

A)  between 6 months and 18 months 
B)  out of currently recognized revenues 
C)  within one year 
D)  out of cash currently on hand 
A)  between 6 months and 18 months 
B)  out of currently recognized revenues 
C)  within one year 
D)  out of cash currently on hand

Question 18

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be

Accepted Answer

A)  $51,125 
B)  $54,500 
C)  $1,125 
D)  $4,500 
A)  $51,125 
B)  $54,500 
C)  $1,125 
D)  $4,500

Question 19

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

Accepted Answer

A)  funded 
B)  unfunded 
C)  defined benefit 
D)  defined contribution 
A)  funded 
B)  unfunded 
C)  defined benefit 
D)  defined contribution

Question 20

Several months ago,Maximilien Company experienced a spill of radioactive materials into the Missouri River from one of its plants.As a result,the Environmental Protection Agency (EPA)fined the company $1,750,000.The company contested the fine.In addition,an employee is seeking $975,000 damages related to the spill.Finally,a homeowner has sued the company for $580,000.Although the homeowner lives 15 miles downstream from the plant,he believes that the spill has reduced his home's resale value by $580,000.
Maximilien's legal counsel believes the following will happen in relationship to these incidents:
   ​

Accepted Answer

The answer of Several months ago,Maximilien Company experienced a spill...

Exam 10: Liabilities: Current,installment Notes,and Contingencies

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

Interest expense is reported in the operating expense section of the income statement.

Medicare taxes are paid by both the employee and the employer.

The current portion of long-term debt should

The accounting for defined benefit plans is usually very easy and straightforward.

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

The journal entry used to record the payment of a discounted note is

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

Use the following key (a-d)to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Assuming the social security rate is 6% and Medicare is 1.5%,and all earnings are subject to FICA taxes,what is Green's net pay?

Quick assets include

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

Match the following terms or phrases in (a-g)with the explanations in 1-8.Terms or phrases may be used more than once. -Remote contingent liability

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

A current liability is a debt that is reasonably expected to be paid

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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