Exam 9: Current Liabilities, contingencies, and the Time Value of Money

A company's balance sheet shows the account,Notes Payable.This resulted from a loan made by the company's bank.If the end-of-year balance in the notes payable account exceeds the beginning-of-year balance by $5,000,this is shown on the cash flow statement as an

When a company uses coupon or premium offers in conjunction with the sale of its products,there is no need to record any contingent liability.

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Marti and Sue want to buy a house in 4 years.If the house will cost $180,000,how much must they deposit at the end of every year for the next 4 years at 5% compounded annually in order to buy the house?

A bank loaned Shrugg Stone Company $35,000 on a 1-year,6% note,but deducted the interest in advance.The journal entry made by Shrugg Stone to record receipt of the cash would include an

Generally,an increase in a current liability results in an increase in the operating activities category of the cash flow statement.

Which of the following is an example of a contingent liability?

When borrowing money to be repaid in regular future payments,the payment is based on the present value of the loan,the interest rate and the length of the loan.

Assume the current ratio is 3 to 1.Estimating the warranties expense on the period's sales would cause the current ratio to

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Mackie's individual retirement account (IRA)currently has a balance of $100,000 and is earning 6%.Beginning one year from today,what equal annual amounts can be withdrawn from the IRA for 10 years so that the balance after the tenth withdrawal is zero?

Simple interest on a loan can be calculated by multiplying the principal by the annual interest rate expressed as a percentage of the time in years or a fraction of the time in years.

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If Garrett has $5,000 per year to invest for 10 years and wants to accumulate $87,745 at the end of that time,he must find an investment that is earning at a rate of

If the market value that you paid for a car is known and the annual payment and number of payments is known,the table factor to help find the interest rate can be calculated by dividing ______________________.

Long-term assets are $800,current liabilities are $500,and long-term liabilities are $600.If the current ratio is 2.5 to 1,then current assets are

Executive,Inc.has a weekly payroll of $10,000 for a 5-day workweek,Monday through Friday.If December 31,the last day of the accounting year,falls on Thursday,Executive would make an adjusting entry that would

In the statement of cash flows,a decrease in accounts payable would be shown as an increase in the Operating Activities category.

An annuity is a series of equal payments made at equal intervals in the future.

For users of financial statements,the current liability classification in the balance sheet is important because it is most closely tied to the concept of profitability.

A note payable due in two years is a current liability.

Assume the current ratio is 2 to 1.Payment on accrued salaries payable would cause the current ratio to

An example of a current liability that must be accrued is