Question 1

A liability for an unasserted claim must be accrued if it is reasonably possible that the claim will be asserted.

Accepted Answer

A) True 
 B)False

Question 2

A quality-assurance warranty typically results in the seller:

Accepted Answer

A) Accruing an expense for anticipated warranty costs at the time the warrantied product is sold. 
B) Recognizing an asset for accrued warranty costs which is amortized over the life of the warranty. 
C) Recognizing revenue over the life of the extended warranty. 
D) Refunding warranty payments upon expiration of the warranty. 
A) Accruing an expense for anticipated warranty costs at the time the warrantied product is sold. 
B) Recognizing an asset for accrued warranty costs which is amortized over the life of the warranty. 
C) Recognizing revenue over the life of the extended warranty. 
D) Refunding warranty payments upon expiration of the warranty.

Question 3

On September 1,2016,Hiker Shoes issued a $100,000,8-month,noninterest-bearing note.The loan was made by Second Commercial Bank where the stated discount rate is 9%.Hiker's effective interest rate on this loan (rounded)is:

Accepted Answer

A) 9.0%. 
B) 9.5%. 
C) 9.6%. 
D) 9.7%. 
A) 9.0%. 
B) 9.5%. 
C) 9.6%. 
D) 9.7%.

Question 4

When cash is received from customers in the form of a refundable deposit,the cash account is increased with a corresponding increase in:

Accepted Answer

A) A current liability. 
B) Revenue. 
C) Shareholders' equity. 
D) Paid-in capital. 
A) A current liability. 
B) Revenue. 
C) Shareholders' equity. 
D) Paid-in capital.

Question 5

The rate of interest printed on the face of a note payable is called the:

Accepted Answer

A) Yield rate. 
B) Effective rate. 
C) Market rate. 
D) Stated rate. 
A) Yield rate. 
B) Effective rate. 
C) Market rate. 
D) Stated rate.

Question 6

Expense for a quality-assurance warranty is recorded along with the related liability in the reporting period in which the product under warranty is sold.

Accepted Answer

A) True 
 B)False

Question 7

A loss contingency should be accrued in a company's financial statements only if the likelihood that a liability has been incurred is:

Accepted Answer

A) At least remotely possible and the amount of the loss is known. 
B) Reasonably possible and the amount of the loss is known. 
C) Reasonably possible and the amount of the loss can be reasonably estimated. 
D) Probable and the amount of the loss can be reasonably estimated. 
A) At least remotely possible and the amount of the loss is known. 
B) Reasonably possible and the amount of the loss is known. 
C) Reasonably possible and the amount of the loss can be reasonably estimated. 
D) Probable and the amount of the loss can be reasonably estimated.

Question 8

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 most correct term.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 9

What is the rebate promotion liability that Holyoak should report in its December 31,2016,balance sheet?

Accepted Answer

A) $20,000. 
B) $28,000. 
C) $18,000. 
D) $19,000. 
A) $20,000. 
B) $28,000. 
C) $18,000. 
D) $19,000.

Question 10

As part of a promotion campaign,Funzy Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons.The cars cost Funzy $1.50 each.Experience indicates that 4% of the coupons eventually will be redeemed.During the last month of 2013,the first month of the offer,12 million coupons were distributed and 240,000 million of the coupons were redeemed.What amount should Funzy report as a promotional expense for coupons on its December 31,2013,income statement?

Accepted Answer

A) $ 0. 
B) $ 40,000. 
C) $ 80,000. 
D) $120,000. 
A) $ 0. 
B) $ 40,000. 
C) $ 80,000. 
D) $120,000.

Question 11

Other things being equal,most managers would prefer to report liabilities as noncurrent rather than current.The logic behind this preference is that the long-term classification permits the company to report:

Accepted Answer

A) Higher working capital and a higher inventory turnover. 
B) Lower working capital and a higher current ratio. 
C) Higher working capital and a higher current ratio. 
D) Higher working capital and a lower debt to equity ratio. 
A) Higher working capital and a higher inventory turnover. 
B) Lower working capital and a higher current ratio. 
C) Higher working capital and a higher current ratio. 
D) Higher working capital and a lower debt to equity ratio.

Question 12

The most common type of liability is:

Accepted Answer

A) One that comes into existence due to a loss contingency. 
B) One that must be estimated. 
C) One that comes into existence due to a gain contingency. 
D) One to be paid in cash and for which the amount and timing are known. 
A) One that comes into existence due to a loss contingency. 
B) One that must be estimated. 
C) One that comes into existence due to a gain contingency. 
D) One to be paid in cash and for which the amount and timing are known.

Question 13

Which of the following is the best definition of a current liability?

Accepted Answer

A) An obligation payable within one year. 
B) An obligation payable within one year of the balance sheet date. 
C) An obligation payable within one year or within the normal operating cycle,whichever is longer. 
D) An obligation expected to be satisfied with current assets or by the creation of other current liabilities. 
A) An obligation payable within one year. 
B) An obligation payable within one year of the balance sheet date. 
C) An obligation payable within one year or within the normal operating cycle,whichever is longer. 
D) An obligation expected to be satisfied with current assets or by the creation of other current liabilities.

Question 14

Which of the following is true about the initial journal entry used to record quality-assurance warranties?

Accepted Answer

The answer of Which of the following is true about...

Question 15

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 most correct term.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 16

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

Accepted Answer

A) More likely than not and the amount of the loss is known. 
B) At least reasonably possible and the amount of the loss is known. 
C) At least reasonably possible and the amount of the loss can be reasonably estimated. 
D) Probable and the amount of the loss can be reasonably estimated. 
A) More likely than not and the amount of the loss is known. 
B) At least reasonably possible and the amount of the loss is known. 
C) At least reasonably possible and the amount of the loss can be reasonably estimated. 
D) Probable and the amount of the loss can be reasonably estimated.

A liability for an unasserted claim must be accrued if it is reasonably possible that the claim will be asserted.

A quality-assurance warranty typically results in the seller:

On September 1,2016,Hiker Shoes issued a $100,000,8-month,noninterest-bearing note.The loan was made by Second Commercial Bank where the stated discount rate is 9%.Hiker's effective interest rate on this loan (rounded)is:

When cash is received from customers in the form of a refundable deposit,the cash account is increased with a corresponding increase in:

The rate of interest printed on the face of a note payable is called the:

Expense for a quality-assurance warranty is recorded along with the related liability in the reporting period in which the product under warranty is sold.

A loss contingency should be accrued in a company's financial statements only if the likelihood that a liability has been incurred is:

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 most correct term.

What is the rebate promotion liability that Holyoak should report in its December 31,2016,balance sheet?

Other things being equal,most managers would prefer to report liabilities as noncurrent rather than current.The logic behind this preference is that the long-term classification permits the company to report:

The most common type of liability is:

Which of the following is the best definition of a current liability?

Which of the following is true about the initial journal entry used to record quality-assurance warranties?

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 most correct term.

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters

Exam 13: Current Liabilities and Contingencies

A liability for an unasserted claim must be accrued if it is reasonably possible that the claim will be asserted.

A quality-assurance warranty typically results in the seller:

On September 1,2016,Hiker Shoes issued a $100,000,8-month,noninterest-bearing note.The loan was made by Second Commercial Bank where the stated discount rate is 9%.Hiker's effective interest rate on this loan (rounded)is:

When cash is received from customers in the form of a refundable deposit,the cash account is increased with a corresponding increase in:

The rate of interest printed on the face of a note payable is called the:

Expense for a quality-assurance warranty is recorded along with the related liability in the reporting period in which the product under warranty is sold.

A loss contingency should be accrued in a company's financial statements only if the likelihood that a liability has been incurred is:

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 most correct term.

What is the rebate promotion liability that Holyoak should report in its December 31,2016,balance sheet?

Other things being equal,most managers would prefer to report liabilities as noncurrent rather than current.The logic behind this preference is that the long-term classification permits the company to report:

The most common type of liability is:

Which of the following is the best definition of a current liability?

Which of the following is true about the initial journal entry used to record quality-assurance warranties?

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 most correct term.

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters