Question 1

The proposed purchase price of an asset should be compared to the present value of the benefits it will generate over its useful life.

Accepted Answer

A) True 
 B)False

Question 2

A liability must never be classified as current if it is due in more than one year.

Accepted Answer

A) True 
 B)False

Question 3

Commercial paper consists of secured loans that are sold to the public.

Accepted Answer

A) True 
 B)False

Question 4

Explain why a creditor would be concerned if your company had a current ratio of less than 1.0?

Accepted Answer

A current ratio of less than 1.0 would i

Question 5

Failure to record a liability probably will

Accepted Answer

A) result in an overstated net income. 
B) result in overstated total liabilities and stockholders' equity. 
C) have no effect on net income. 
D) result in overstated total assets. 
A) result in an overstated net income. 
B) result in overstated total liabilities and stockholders' equity. 
C) have no effect on net income. 
D) result in overstated total assets.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

The cost of employing an individual incl

Question 8

Meggie's Fitness Center received $800 from a customer in advance for a one-year membership in the fitness center.The entry that would be made to record the fee receipt is

Accepted Answer

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Unearned revenue is an example of a definitely determinable liability.

Accepted Answer

A) True 
 B)False

Question 12

Decision makers rely on the future values,rather than on the present values of future cash flows.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) Dry cleaners 
B) Realtor 
C) Magazine publisher 
D) Department store 
A) Dry cleaners 
B) Realtor 
C) Magazine publisher 
D) Department store

Question 14

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

Accepted Answer

A) debit to Salaries Expense for $24,000. 
B) debit to Salaries Payable for $24,000. 
C) credit to Salaries Payable for $24,000. 
D) debit to Salaries Expense for $9,000. 
A) debit to Salaries Expense for $24,000. 
B) debit to Salaries Payable for $24,000. 
C) credit to Salaries Payable for $24,000. 
D) debit to Salaries Expense for $9,000.

Question 15

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 16

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?

Accepted Answer

a.$4,767.00 [($1,000

Question 17

Calculate answers to the following scenarios using present value tables:
a.If $100 is deposited into an account paying 8 percent simple interest,what will be the value of the account in 5 years?
b.If an accumulation of $8,000 is desired at the end of 4 years,what amount must be deposited now to accomplish that goal,assuming 12 percent interest compounded annually?
c.What is the present value of $300 received at the end of each year for 4 years,assuming 9 percent interest compounded annually?
d.What amount must be deposited at the bank today to grow to $10,000 in 5 years,assuming 14 percent interest compounded semiannually?

Accepted Answer

a.$140 [(100 × 0.08 × 5)+ $100

Question 18

Usually,failure to record a liability means failure to record a(n)

Accepted Answer

A) revenue. 
B) note. 
C) expense. 
D) asset. 
A) revenue. 
B) note. 
C) expense. 
D) asset.

Question 19

Novack Company has current assets of $100,000,total assets of $300,000,current liabilities of $75,000 of which accounts payable are $35,000,and total liabilities of $150,000.Calculate Novack's working capital and current ratio.

Accepted Answer

Working Capital = Current Asse

Question 20

When compound interest is used,interest accumulates less quickly than when simple interest is used.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Fair Value Accounting

The proposed purchase price of an asset should be compared to the present value of the benefits it will generate over its useful life.

A liability must never be classified as current if it is due in more than one year.

Commercial paper consists of secured loans that are sold to the public.

Explain why a creditor would be concerned if your company had a current ratio of less than 1.0?

Failure to record a liability probably will

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

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

Meggie's Fitness Center received $800 from a customer in advance for a one-year membership in the fitness center.The entry that would be made to record the fee receipt is

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

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

Unearned revenue is an example of a definitely determinable liability.

Decision makers rely on the future values,rather than on the present values of future cash flows.

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

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

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

Usually,failure to record a liability means failure to record a(n)

Novack Company has current assets of $100,000,total assets of $300,000,current liabilities of $75,000 of which accounts payable are $35,000,and total liabilities of $150,000.Calculate Novack's working capital and current ratio.

When compound interest is used,interest accumulates less quickly than when simple interest is used.

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

Filters