Exam 10: Current Liabilities and Fair Value Accounting

Social Security and Medicare taxes are borne entirely by the employee.

Of a company's employees,50 percent typically qualify to receive two weeks' paid vacation a year (50 weeks).The entry to record the estimated liability for vacation pay for a week in which the total payroll is $8,800 would be

Which of the following does not represent a liability?

Because accounting measures should be verifiable,liabilities should not be estimated.

The product warranty liability is an example of an estimated liability.

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

Payables turnover is measured in number of days.

Working capital equals current assets divided by current liabilities.

Reynaldo Company has current assets of $115,000 and current liabilities of $75,000 of which accounts payable are $65,000.Reynaldo's cost of goods sold is $420,000,its merchandise inventory increased by $20,000,and accounts payable were $45,000 the prior year.Calculate Reynaldo's working capital,payables turnover,and days' payable (to one digit after decimal).

Expected obligations arising from programs,such as frequent flyer miles,are usually recorded as a reduction in sales (in a contra-sales account)with a related liability.

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

The annual interest earned on an amount deposited into a bank account will be the same each year when compound interest is used.

Unearned revenue is an example of a definitely determinable liability.

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?

Present value refers to an amount that must be invested today at a given rate of interest to produce a given future value.

A liability for dividends exists only when the board of stockholders requests them.

When accounting for property taxes,which of the following accounts normally would not be credited?

The payables turnover is measured

An ordinary annuity is a series of equal payments made at the end of equal intervals of time.

Lawsuits against a company in connection with an industrial accident would not be listed in the contingent liabilities section on the balance sheet.