Exam 13: Current Liabilities and Contingencies

A disclosure note is required for all material loss contingencies for which the probability of loss is reasonably possible.

B Corp.has an employee benefit plan for compensated absences that gives each employee 10 paid vacation days and 10 paid sick days.Both vacation and sick days can be carried over indefinitely.Employees can elect to receive payment in lieu of vacation days;however,no payment is given for sick days not taken.At December 31,2016,B's unadjusted balance of liability for compensated absences was $42,000.B estimated that there were 300 total vacation days and 150 sick days available at December 31,2016.B's employees earn an average of $200 per day.In its December 31,2016,balance sheet,what amount of liability for compensated absences is B required to report?

An asset for a gain contingency should not be accrued unless it is probable that the gain contingency will be realized.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Indicate (by letter)the way each of the items listed below should be reported in a balance sheet at December 31,2016.

What was General's coupon promotion expense in 2016?

Paul Company issues a product recall due to an apparently preexisting and material defect discovered after the end of its fiscal year.Financial statements have not yet been issued.The action required of Paul Company for this reasonably estimable contingency for the year just ended is:

Which of the following is not a liability?

When a product or service is delivered for which a customer advance has been previously received,the appropriate journal entry includes:

Which of the following is not true about deferred revenue?

Panther Co.had a quality-assurance warranty liability of $350,000 at the beginning of 2016 and $310,000 at the end of 2016.Warranty expense is based on 4% of sales,which were $50 million for the year.What were the warranty expenditures for 2016?

Peterson Photoshop sold $1,000 in gift cards on a special promotion on October 15,2016,and sold $1,500 in gift cards on another special promotion on November 15,2016.Of the cards sold in October,$100 were redeemed in October,$250 in November,and $300 in December.Of the cards sold in November,$150 were redeemed in November and $350 were redeemed in December.Peterson views the probability of redemption of a gift card as remote if the card has not been redeemed within two months.At 12/31/2016,Peterson would show an deferred revenue account for the gift cards with a balance of:

When a material gain contingency is probable and the amount of gain can be reasonably estimated,the gain should be:

Universal Travel Inc.borrowed $500,000 on November 1,2016,and signed a 12-month note bearing interest at 6%.Interest is payable in full at maturity on October 31,2017.In connection with this note,Universal Travel Inc.should report interest payable at December 31,2016,in the amount of:

Which of the following is not a current liability?

Of the following,which typically would not be classified as a current liability?

On January 1,2016,G Corporation agreed to grant all its employees two weeks paid vacation each year,with the stipulation that vacations earned each year can be taken the following year.For the year ended December 31,2016,G's employees each earned an average of $800 per week.A total of 500 vacation weeks earned in 2016 were not taken during 2016.Wage rates for employees rose by an average of 5 percent by the time vacations actually were taken in 2017.What is the amount of G's 2017 wages expense related to 2016 vacation time?

At times,businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided.These customer advances represent:

In the current year,Hanna Company reported quality-assurance warranty expense of $190,000 and the warranty liability account increased by $20,000.What were warranty expenditures during the year?

Jane's Donut Co.borrowed $200,000 on January 1,2016,and signed a two-year note bearing interest at 12%.Interest is payable in full at maturity on January 1,2018.In connection with this note,Jane's should report interest expense at December 31,2016,in the amount of: