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

Assume that you know the total dollar amount of a loan and the amount of the monthly payments.How can you determine the interest rate as a percentage of the loan?

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. David,a high school math teacher,wants to set up an IRA account into which he will deposit $2,000 per year.He plans to teach for 20 more years and then retire.If the interest on his account is 7% compounded annually,how much will be in his account when he retires?

A company's weekly payroll amounts to $50,000 and payday for the week is every Friday.Employees work five days per week,Monday through Friday.The appropriate journal entry was recorded at the end of the accounting period,Tuesday,March 31,2013.What amount is wages expense for April for the payday,Friday,April,3,2013?

If the present and future values are known along with the number of periods,then the _________________________ can be determined.

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 a company wishes to accumulate $500,000 in 20 years at 5% by making equal yearly deposits into an account,calculation of the deposits is an application of the

In 2012,Accu Heating Company sold 400 water heaters for $350 each.The water heaters carry a 2-year warranty for repairs.Accu estimates that repair costs will average 2% of the total selling price.How much is recorded in the warranty liability account as a result of selling the water heaters during 2012?

You just won the lottery.You can take your $2 million in a lump sum today,or you can receive $220,000 per year over the next 12 years.Assuming a 6% interest rate,which would you prefer,ignoring tax considerations?

To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years,you would use which type of time value of money calculation?

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. The future value of $6,000 at 12% compounded quarterly for 5 years is

A contingent liability is recorded if it is probable and can be reasonably estimated.

A bank loaned Atlas Company $10,000 on a 1-year,6% note,but deducted the interest in advance.The journal entry made by Atlas to record receipt of the cash would include a

The terms referring to contingencies differ between U.S.GAAP and IFRS.

On May 1,the Chris Company borrowed $30,000 from the Third Street Bank on a 1-year,6% note.If the company keeps its records on a calendar year,an entry is needed on December 31 to increase

On November 1,2014,Chancellor Co.borrowed $80,000 from State Bank and signed a 12%,six-month note payable,all due at maturity.The interest on this loan is stated separately.At December 31,2014,the adjusting entry for this note includes a:

The issue price of a bond is based on the _____________________ of the cash flows that the bond will produce.

The present value and future value concepts are applied to measure the amount of several accounts common in accounting.What are some accounts that are valued in this manner?

A company has $200 in cash,$500 in accounts receivable,and $700 in inventory.If current liabilities are $400,then the current ratio would be

An invoice received from a supplier for $8,000 on January 1 with terms 1/15,n/30 means that the company should pay

What is the meaning of the word annuity? Can the present value of an annuity be calculated as a series of single amounts? If so,how?

The interest earned on the principal amount only is referred to as ______________________________.