Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The most common examples of commitments are leases and purchase agreements.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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

Accepted Answer

A) True 
 B)False

Question 5

Product warranties are an expense of the period in which the product must be repaired or replaced.

Accepted Answer

A) True 
 B)False

Question 6

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 7

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Accepted Answer

A) True 
 B)False

Question 8

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest. The future value table is used by multiplying the $700 by which factor?

Accepted Answer

A)  28 periods at 3 percent 
B)  7 periods at 3 percent 
C)  7 periods at 12 percent 
D)  28 periods at 7 percent 
A)  28 periods at 3 percent 
B)  7 periods at 3 percent 
C)  7 periods at 12 percent 
D)  28 periods at 7 percent

Question 9

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 10

First City Bank computes interest semiannually. If the interest rate is currently 6 percent pa, the amount deposited today should be multiplied by which future value factor to calculate the amount that will accumulate by the end of 10 years?

Accepted Answer

A)  20 periods at 12 percent 
B)  20 periods at 3 percent 
C)  10 periods at 6 percent 
D)  10 periods at 3 percent 
A)  20 periods at 12 percent 
B)  20 periods at 3 percent 
C)  10 periods at 6 percent 
D)  10 periods at 3 percent

Question 11

Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30.
  The entry to record the September 10 transaction (amounts rounded) is:

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

When a business sells an item and collects a state sales tax on it, a current liability to the state arises.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Accepted Answer

A)  Matching 
B)  Consistency 
C)  Historical cost 
D)  Full disclosure 
A)  Matching 
B)  Consistency 
C)  Historical cost 
D)  Full disclosure

Question 16

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 17

Meggie's Fitness Center received $720 from a customer in advance for one year membership in the fitness center. The entry that would be made to record the fee receipt is:

Accepted Answer

The answer of Meggie's Fitness Center received $720 from a...

Question 18

A company receives $180 for a sale, of which $10 is for sales tax. The journal entry to record the sale is:

Accepted Answer

The answer of A company receives $180 for a sale,...

Question 19

For notes payable whose interest is stated separately, the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.

Accepted Answer

A) True 
 B)False

Question 20

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 $3,500 made at the beginning of period 1 would grow to how much at the end of three years?

Accepted Answer

A)  $3,920.00 
B)  $4,917.50 
C)  $4,389.00 
D)  $11,809.00 
A)  $3,920.00 
B)  $4,917.50 
C)  $4,389.00 
D)  $11,809.00

Exam 10: Current Liabilities and Fair Value Accounting

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

The most common examples of commitments are leases and purchase agreements.

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

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

Product warranties are an expense of the period in which the product must be repaired or replaced.

All of the following are classified as definitely determinable liabilities except

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest. The future value table is used by multiplying the $700 by which factor?

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

First City Bank computes interest semiannually. If the interest rate is currently 6 percent pa, the amount deposited today should be multiplied by which future value factor to calculate the amount that will accumulate by the end of 10 years?

Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30. The entry to record the September 10 transaction (amounts rounded) is:

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

When a business sells an item and collects a state sales tax on it, a current liability to the state arises.

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

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

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

Meggie's Fitness Center received $720 from a customer in advance for one year membership in the fitness center. The entry that would be made to record the fee receipt is:

A company receives $180 for a sale, of which $10 is for sales tax. The journal entry to record the sale is:

For notes payable whose interest is stated separately, the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.

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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