Exam 10: Current Liabilities and Fair Value Accounting

Calculate answers to the following using future value and/or present value tables: a.What is the present value of receiving $1,000 at the end of each year for 6 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?

Lines of credit from the bank need not be disclosed in the financial statements or in the notes.

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

Use this information to answer the following question. -A deposit of $5,800 made at the end of each year for three years would grow to how much,assuming an APR of 12 percent?

Use this information to answer the following question. -What amount must be deposited today so that $1,200 may be withdrawn at the end of each year for three years,assuming an APR of 7 percent?

Explain why the cost of employing someone is more than just the wage or salary paid to the employee.

Common examples of commitments are leases and purchase agreements.

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

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

The classification of a liability as current or long-term is not important to the evaluation of a company's liquidity.

Based on past experience,it should be possible to estimate the amount that a product warranty will cost the company in the future.

Which of the following phrases is not descriptive of an ordinary annuity?

Current liabilities are classified as either definitely determinable liabilities or contingent liabilities.

An employee has gross earnings of $1,200 and withholdings of $91.80 for Social Security and Medicare taxes and $120 for income taxes.The employer pays $91.80 for Social Security and Medicare taxes,$9.60 for FUTA,and $64.80 for SUTA.The total cost of this employee to the employer is

Use this information to answer the following question. -What is the present value of receiving $800 at the end of each year for three years,assuming an APR of 7 percent?

Flint Company produces widgets that cost $30 each and have a 5 percent failure rate.If 500 widgets are sold,the entry to record the estimated product warranty expense would be

Current liabilities are debts that are expected to be satisfied within

Use this information to answer the following question. The following totals for the month of September were taken from the payroll register of Meadors Company: -The journal entry to record the monthly payroll on September 30 would include a

To find the days' payable,

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