Question 1

Interest on a promissory note is recognized when the note is issued.

Accepted Answer

A) True 
 B)False

Question 2

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 $8,000 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)  $2,371.07 
B)  $26,992.00 
C)  $5,693.95 
D)  $11,240.00 
A)  $2,371.07 
B)  $26,992.00 
C)  $5,693.95 
D)  $11,240.00

Question 3

Use this information to answer the following question. Baker Company has the following information for the pay period of January 1-15, 2010. Payment occurs on January 20.
$\begin{array}{lrlr}
\text { Gross payroll } & \$ 16,000 & \text { Federal income taxes withheld } & \$ 1,800 \
\text { Social security and Medicare rate } & 7.65 \% & \text { Federal unemployment tax rate } & 8 \% \
\text { State unemployment tax rate } & 5.4 \% & &
\end{array}$ Payroll Taxes and Benefits Expense would be recorded for

Accepted Answer

A)  $1,224. 
B)  $2,216. 
C)  $4,016. 
D)  $992. 
A)  $1,224. 
B)  $2,216. 
C)  $4,016. 
D)  $992.

Question 4

Accrued liabilities often arise as a result of the passage of time.

Accepted Answer

A) True 
 B)False

Question 5

The amount recorded for Payroll Taxes and Benefits Expense is borne entirely by the employee.

Accepted Answer

A) True 
 B)False

Question 6

Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Present Value of } \$ 1 \text { at } 7 \text { Percent } & \begin{array}{c}
\text { Present Value of Ordinary Annuity of } \$ 1 \
\text { at } 7 \text { Percent }
\end{array} \
\hline 1 & 0.935 & 0.935 \
\hline 2 & 0.873 & 1.808 \
\hline 3 & 0.816 & 2.624 \
\hline
\end{array}$ What amount must be deposited today so that $600 may be withdrawn at the end of each year for three years?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 7

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 explanations 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 8

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

Accepted Answer

A) True 
 B)False

Question 9

Lee Provo is paid $8 per hour, plus time-and-one-half for hours over 40 for a given week. During the week of January 21, Provo worked 46 hours. Social security taxes are 6.2 percent, Medicare taxes are 1.45 percent, $50 is withheld for federal income taxes, $12 is withheld for state income taxes, and $15 is withheld for medical insurance. In addition, Provo's employer must pay social security taxes of 6.2 percent, Medicare taxes of 1.45 percent, state unemployment taxes of 5.4 percent, and federal unemployment taxes of .8 percent. Calculate (a) Provo's gross earnings, (b) Provo's take-home pay, (c) the employer's payroll taxes expense, and (d) the total cost of employing Provo for the week. Round all amounts to the nearest penny.

Accepted Answer

a. $392.00 [(40 @#LAT-DLM& $8) + (6 @#LAT-DLM& $12

Question 10

If the net present value of a proposed investment is negative, it means that the investment should not be made.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

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 14

Liabilities generally arise from past transactions.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following businesses most likely would have a large Unearned Revenue account balance at all times?

Accepted Answer

A)  Dry cleaners 
B)  Realtor 
C)  Magazine publisher 
D)  Department store 
A)  Dry cleaners 
B)  Realtor 
C)  Magazine publisher 
D)  Department store

Question 16

All liabilities involve an obligation of one sort or another.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

a. $683[($1,000 @#LAT-DLM& .68

Question 18

Purchase agreements are

Accepted Answer

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

Question 19

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 20

Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30.
  The September 30 adjusting entry, rounded to the nearest dollar, to accrue the interest expense on the note payable is

Accepted Answer

The answer of Use this information to answer the following...

Exam 10: Current Liabilities and Fair Value Accounting

Interest on a promissory note is recognized when the note is issued.

Accrued liabilities often arise as a result of the passage of time.

The amount recorded for Payroll Taxes and Benefits Expense is borne entirely by the employee.

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

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

If the net present value of a proposed investment is negative, it means that the investment should not be made.

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

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

Liabilities generally arise from past transactions.

Which of the following businesses most likely would have a large Unearned Revenue account balance at all times?

All liabilities involve an obligation of one sort or another.

Purchase agreements are

A contingent liability is recorded in the accounting records

Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30. The September 30 adjusting entry, rounded to the nearest dollar, to accrue the interest expense on the note payable is

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-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

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