Question 1

A commitment is a legal obligation that meets the technical requirements for recognition as a liability.

Accepted Answer

A) True 
 B)False

Question 2

There is no limit to the amount of income subject to the Medicare tax.

Accepted Answer

A) True 
 B)False

Question 3

A company receives $360 for a sale,of which $20 is for sales tax.The journal entry to record the sale is:

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 4

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 5

You win the grand prize and can choose between receiving $100,000 today or $20,000 per year for seven years.Ignoring income taxes,how would you go about making your decision?

Accepted Answer

The present value of the $20,000 annuity

Question 6

Payroll Taxes and Benefits Expense includes all of the following except

Accepted Answer

A) federal income taxes. 
B) Social Security taxes. 
C) Medicare taxes. 
D) unemployment taxes. 
A) federal income taxes. 
B) Social Security taxes. 
C) Medicare taxes. 
D) unemployment taxes.

Question 7

A company enters into a contract to purchase a certain quantity of goods from another company during the following month.At this point,would a liability exist? Explain why or why not.

Accepted Answer

A liability would not exist be

Question 8

If the present value of the net cash flows expected from a machine is less than its purchase price,the investment should not be made.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Interest on a promissory note is recognized when the note is issued.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

A business accepts a 9 percent,$50,000 note due in 120 days.Assuming simple interest,how much (amount rounded)will the business receive when the note falls due?

Accepted Answer

A) $50,000 
B) $50,150 
C) $51,480 
D) $54,520 
A) $50,000 
B) $50,150 
C) $51,480 
D) $54,520

Question 15

The lower the interest rate,the higher the present value factor.

Accepted Answer

A) True 
 B)False

Question 16

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 ratio?

Accepted Answer

A) $3,000 
B) $21,000 
C) 1.43 
D) 0.55 
A) $3,000 
B) $21,000 
C) 1.43 
D) 0.55

Question 17

Which of the following most likely is a definitely determinable liability during interim periods?

Accepted Answer

A) Estimated property tax payable 
B) Accrued interest payable 
C) Estimated product warranty liability 
D) Estimated income taxes payable 
A) Estimated property tax payable 
B) Accrued interest payable 
C) Estimated product warranty liability 
D) Estimated income taxes payable

Question 18

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Prepaid Property Taxes 
B) Cash 
C) Estimated Property Taxes Payable 
D) Property Taxes Expense 
A) Prepaid Property Taxes 
B) Cash 
C) Estimated Property Taxes Payable 
D) Property Taxes Expense

Exam 11: Current Liabilities and Fair Value Accounting

A commitment is a legal obligation that meets the technical requirements for recognition as a liability.

There is no limit to the amount of income subject to the Medicare tax.

A company receives $360 for a sale,of which $20 is for sales tax.The journal entry to record the sale is:

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?

You win the grand prize and can choose between receiving $100,000 today or $20,000 per year for seven years.Ignoring income taxes,how would you go about making your decision?

Payroll Taxes and Benefits Expense includes all of the following except

A company enters into a contract to purchase a certain quantity of goods from another company during the following month.At this point,would a liability exist? Explain why or why not.

If the present value of the net cash flows expected from a machine is less than its purchase price,the investment should not be made.

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

Interest on a promissory note is recognized when the note is issued.

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

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

A business accepts a 9 percent,$50,000 note due in 120 days.Assuming simple interest,how much (amount rounded)will the business receive when the note falls due?

The lower the interest rate,the higher the present value factor.

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 ratio?

Which of the following most likely is a definitely determinable liability during interim periods?

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

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

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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