Exam 11: Current Liabilities and Fair Value Accounting

Calculate answers to the following scenarios: a.To what amount will an $800 deposit grow,assuming an APR of 9 percent paid annually,5 years,and simple interest? b.To what amount will a $500 deposit grow,assuming an APR of 10 percent paid semiannually,three years,and simple interest?

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

The theoretical value of an asset is the future value of its expected benefits.

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

Company A's current assets = $10,000,total assets = $26,000,current liabilities = $7,000 and total liabilities = $47,000.What is Company A's working capital?

To calculate payables turnover,an increase in merchandise inventory must be added to cost of goods sold before dividing by average accounts payable.

Which of the following is a contingent liability?

Calculate answers to the following scenarios. a.Jackson Company purchased machinery by executing a $50,000 non-interest-bearing note due in four years.Assuming the going rate for similar notes is 6 percent and using the appropriate present value table,for how much should the machinery be recorded? b.Wendy Kwon is making bank deposits of $3,000 at the beginning of each year for three years for purposes of buying a car.Assuming an interest rate of 7 percent compounded annually,how much will she have saved for the purchase at the end of year 3? (Calculate manually and round to the nearest dollar. ) c.Ashton Jones would like to make a lump-sum deposit today so that he can withdraw $15,000 at the end of each year for the next three years.Assuming a 9 percent interest rate and using the appropriate present value table,what should she invest today?

A contingent liability is a liability that may materialize in the future because of something that happened in the past.

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 entry to record the payment of net payroll would include a

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

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.

Which of the following taxes is not subject to a maximum amount per employee per year?

A contingent liability is recorded in the accounting records

In a deferred payment arrangement,interest is charged only if it is stated.

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 on January 20 would be a debit to

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

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.

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

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