Question 1

If the amount of a liability cannot be exactly determined,it should not be recorded.

Accepted Answer

A) True 
 B)False

Question 2

Identify and briefly discuss the three approaches for determining fair value identified by the FASB.

Accepted Answer

The FASB identifies three approaches to

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

An estimated liability is not a definite obligation of the firm because the amount cannot be definitely determined.

Accepted Answer

A) True 
 B)False

Question 5

A customer is injured using a company's product.The potential liability that may result is called a(n)

Accepted Answer

A) contingent liability. 
B) estimated liability. 
C) definitely determinable liability. 
D) estimated warranty liability. 
A) contingent liability. 
B) estimated liability. 
C) definitely determinable liability. 
D) estimated warranty liability.

Question 6

A company sells merchandise on a deferred payment plan,ultimately receiving $6,000 on the account receivable.On the payment date,the company would

Accepted Answer

A) credit Accounts Receivable for less than $6,000. 
B) debit Interest Income for the imputed amount. 
C) credit Sales for less than $6,000. 
D) debit the asset account for $6,000. 
A) credit Accounts Receivable for less than $6,000. 
B) debit Interest Income for the imputed amount. 
C) credit Sales for less than $6,000. 
D) debit the asset account for $6,000.

Question 7

The term salaries refers to the compensation of employees who are paid at an hourly rate.

Accepted Answer

A) True 
 B)False

Question 8

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20.
 
-The entry to record the payroll would include a

Accepted Answer

A) debit to Salaries Payable for the net amount. 
B) credit to State Unemployment Tax Payable. 
C) debit to Salaries Expense for the amount paid to the employees. 
D) debit to Salaries Expense for the gross payroll. 
A) debit to Salaries Payable for the net amount. 
B) credit to State Unemployment Tax Payable. 
C) debit to Salaries Expense for the amount paid to the employees. 
D) debit to Salaries Expense for the gross payroll.

Question 9

Use this information to answer the following question.   
-If an accumulation of $16,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years,assuming an APR of 12 percent?

Accepted Answer

A) $4,742.15 
B) $53,984.00 
C) $11,387.90 
D) $22,480.00 
A) $4,742.15 
B) $53,984.00 
C) $11,387.90 
D) $22,480.00

Question 10

Because failure to record a liability generally leads to failure to record an expense,it usually results in an overstatement of income.

Accepted Answer

A) True 
 B)False

Question 11

McAfee Corporation borrowed $20 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

Eighteen million dollars of the loan sho

Question 12

Use this information to answer the following question.

-If $200 is invested at 7 percent APR,which of the following formulas would be used to determine to how much the deposit would grow at the end of three years?

Accepted Answer

A) $200 × 0.935 × 3 
B) $200 ¸ 0.816 
C) $200 ¸ 2.624 × 3 
D) $200 × 2.624 
A) $200 × 0.935 × 3 
B) $200 ¸ 0.816 
C) $200 ¸ 2.624 × 3 
D) $200 × 2.624

Question 13

Which of the following most likely is an estimated liability?

Accepted Answer

A) Liability for vacation pay 
B) Payroll liabilities 
C) Unearned revenues 
D) Current portion of long-term debt 
A) Liability for vacation pay 
B) Payroll liabilities 
C) Unearned revenues 
D) Current portion of long-term debt

Question 14

Kangjon Company allows each employee two weeks' paid vacation after the employee has worked at the company for one year (50 weeks work).On the basis of past experience,management estimates that 80 percent of employees will qualify for vacation pay this year.Assume that the March payroll is $400,000.Compute the vacation pay expense for the month.Show your computation.

Accepted Answer

$12,800 ($

Question 15

Saybrook Company purchased a machine on January 2,2014.Under the terms of the purchase agreement,the company is required to make 14 quarterly installment payments of $23,000 each,beginning April 1,2014.Assuming 16 percent interest compounded quarterly,determine the purchase price of the machine.Use future value and/or present value tables in calculating your answer.

Accepted Answer

Purchase price = $23

Question 16

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 17

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20.
 
-The entry to record the payroll taxes expense would include a credit to

Accepted Answer

A) Salaries Payable. 
B) Federal Income Taxes Payable. 
C) Social Security Tax Payable. 
D) Cash. 
A) Salaries Payable. 
B) Federal Income Taxes Payable. 
C) Social Security Tax Payable. 
D) Cash.

Question 18

Commercial paper normally is issued by companies with poor credit ratings.

Accepted Answer

A) True 
 B)False

Question 19

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20.
 
-Salaries Payable would be recorded for

Accepted Answer

A) $21,520. 
B) $23,968. 
C) $25,952. 
D) $28,400. 
A) $21,520. 
B) $23,968. 
C) $25,952. 
D) $28,400.

Question 20

A contingent liability should be entered into the accounting records if it is both probable and reasonably estimable.

Accepted Answer

A) True 
 B)False

Exam 10: Current Liabilities and Fair Value Accounting

If the amount of a liability cannot be exactly determined,it should not be recorded.

Identify and briefly discuss the three approaches for determining fair value identified by the FASB.

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

An estimated liability is not a definite obligation of the firm because the amount cannot be definitely determined.

A customer is injured using a company's product.The potential liability that may result is called a(n)

A company sells merchandise on a deferred payment plan,ultimately receiving $6,000 on the account receivable.On the payment date,the company would

The term salaries refers to the compensation of employees who are paid at an hourly rate.

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20. -The entry to record the payroll would include a

Use this information to answer the following question. -If an accumulation of $16,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years,assuming an APR of 12 percent?

Because failure to record a liability generally leads to failure to record an expense,it usually results in an overstatement of income.

Use this information to answer the following question. -If $200 is invested at 7 percent APR,which of the following formulas would be used to determine to how much the deposit would grow at the end of three years?

Which of the following most likely is an estimated liability?

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.

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20. -The entry to record the payroll taxes expense would include a credit to

Commercial paper normally is issued by companies with poor credit ratings.

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20. -Salaries Payable would be recorded for

A contingent liability should be entered into the accounting records if it is both probable and reasonably estimable.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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