Question 1

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

Accepted Answer

A) $1,980 
B) $2,205 
C) $6,600 
D) $7,980 
A) $1,980 
B) $2,205 
C) $6,600 
D) $7,980

Question 2

If a company borrows money from its bank and the bank deducts the interest in advance,the company would record the amount of the interest deduction as

Accepted Answer

A) a discount 
B) an expense 
C) a loss 
D) prepaid interest 
A) a discount 
B) an expense 
C) a loss 
D) prepaid interest

Question 3

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. A company will have to pay a $50,000 liability in 4 years.How much must be deposited now into a bank account earning 8% compounded semiannually to fully fund the future payment?

Accepted Answer

A) $34,000 
B) $35,500 
C) $36,523 
D) $36,550 
A) $34,000 
B) $35,500 
C) $36,523 
D) $36,550

Question 4

Creation Corp.stands to receive a sufficient cash settlement from a law suit.Creation needs to record this on its accounting records.

Accepted Answer

A) True 
 B)False

Question 5

If a company purchases $3,000 worth of inventory with terms of 1/15,n30 and pays within 15 days,then the amount paid to the seller would be

Accepted Answer

A) $2,550 
B) $2,970 
C) $3,000 
D) $3,030 
A) $2,550 
B) $2,970 
C) $3,000 
D) $3,030

Question 6

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Accepted Answer

A) $1,800.00 
B) $1,411.20 
C) $2,154.60 
D) $554.04 
A) $1,800.00 
B) $1,411.20 
C) $2,154.60 
D) $554.04

Question 7

Actuarial,Inc.recorded $97,000 in salary expense for January,2013.Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000.How much was paid in cash for salaries during January,2013?

Accepted Answer

A) $96,000 
B) $97,000 
C) $98,000 
D) $99,000 
A) $96,000 
B) $97,000 
C) $98,000 
D) $99,000

Question 8

Mobile Designs,Inc.
Use the selected data from the comparative financial statements for Mobile Designs,Inc.to answer the questions that follow.
Mobile Designs,Inc.
Balance Sheet Accounts
(all accounts have normal balances)
(in millions)
   Refer to the account information for Mobile Designs,Inc.
REQUIRED:
(1)Calculate percentage changes in accounts payable and income taxes payable.Give a possible explanation for the changes in these accounts.
(2)By how much did Mobile Designs' long-term and short-term borrowings change from 2012 to 2013? Give a possible explanation for the change in debt.What other financial statement would be useful in analyzing the change in borrowings? Why?

Accepted Answer

(1)The change in accounts payable may ha

Question 9

Interest payable on a loan becomes a liability:

Accepted Answer

A) When the borrowed money is received. 
B) When the note payable is issued. 
C) At the maturity date. 
D) As it accrues. 
A) When the borrowed money is received. 
B) When the note payable is issued. 
C) At the maturity date. 
D) As it accrues.

Question 10

If the annual interest is 12%,but the compounding is done quarterly,then the interest rate is 4% per period.

Accepted Answer

A) True 
 B)False

Question 11

There are some liabilities,such as income tax payable,for which the amounts must be estimated.Failure to estimate these amounts and record them would be a violation of the

Accepted Answer

A) matching principle 
B) convention of conservation 
C) practice of consistency 
D) concept of historical cost 
A) matching principle 
B) convention of conservation 
C) practice of consistency 
D) concept of historical cost

Question 12

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

Accepted Answer

A) True 
 B)False

Question 13

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. Winston wins the lottery.He wins $20,000 per year to be paid to him for 10 years.The state offers him the choice of a cash settlement now instead of the annual payments for 10 years.If the interest rate is 6%,what is the amount the state will offer for a settlement today?

Accepted Answer

A) $147,200 
B) $154,440 
C) $175,000 
D) $200,000 
A) $147,200 
B) $154,440 
C) $175,000 
D) $200,000

Question 14

Estimated liability for product warranties to be paid in the future is a current liability.

Accepted Answer

A) True 
 B)False

Question 15

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 the interest factor used to calculate the future value of $1 at 6% for 5 periods is 1.338,then the present value of $1 at 6% for 5 periods is

Accepted Answer

A) 1.338 ´ 1.338. 
B) 1/1.338. 
C) 1/(1.338 x 1.338). 
D) 0.338. 
A) 1.338 ´ 1.338. 
B) 1/1.338. 
C) 1/(1.338 x 1.338). 
D) 0.338.

Question 16

An obligation that involves an existing condition for which the outcome is not known with certainty and depends on some event that will occur in the future is call a(n)___________________________.

Accepted Answer

contingent

Question 17

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

Accepted Answer

A) 1.75 to 1 
B) 2.25 to 1 
C) 3.00 to 1 
D) 3.50 to 1 
A) 1.75 to 1 
B) 2.25 to 1 
C) 3.00 to 1 
D) 3.50 to 1

Question 18

A firm's year ends on December 31.Its tax is computed and submitted to the U.S.Treasury on March 15 of the following year.When should the taxes be reported as a liability?

Accepted Answer

Income tax is an item that should be acc

Question 19

In 2013,Minter Co.sold 100 hot air balloons at $4,000 each.The balloons carry a 5-year warranty for defects.Minter estimates that repair costs will average 4% of the total selling price.The estimated warranty liability at the beginning of the year was $42,000.$11,000 in claims was actually incurred during the year to honor their warranty.What was the balance in the ending estimated warranty liability at the end of the year?

Accepted Answer

A) $47,000 
B) $42,000 
C) $37,000 
D) $ 5,000 
A) $47,000 
B) $42,000 
C) $37,000 
D) $ 5,000

Question 20

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 you must calculate the present value of an amount at 8% compounded quarterly for 2 years,then the interest factor used in the calculation is

Accepted Answer

A) 8% for two periods 
B) 2% for eight periods 
C) the interest factor for 8% for two periods divided by 4 
D) twice that for one period at 8% multiplied by 2 
A) 8% for two periods 
B) 2% for eight periods 
C) the interest factor for 8% for two periods divided by 4 
D) twice that for one period at 8% multiplied by 2

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

If a company borrows money from its bank and the bank deducts the interest in advance,the company would record the amount of the interest deduction as

Creation Corp.stands to receive a sufficient cash settlement from a law suit.Creation needs to record this on its accounting records.

If a company purchases $3,000 worth of inventory with terms of 1/15,n30 and pays within 15 days,then the amount paid to the seller would be

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Actuarial,Inc.recorded $97,000 in salary expense for January,2013.Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000.How much was paid in cash for salaries during January,2013?

Interest payable on a loan becomes a liability:

If the annual interest is 12%,but the compounding is done quarterly,then the interest rate is 4% per period.

There are some liabilities,such as income tax payable,for which the amounts must be estimated.Failure to estimate these amounts and record them would be a violation of the

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

Estimated liability for product warranties to be paid in the future is a current liability.

An obligation that involves an existing condition for which the outcome is not known with certainty and depends on some event that will occur in the future is call a(n)___________________________.

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

A firm's year ends on December 31.Its tax is computed and submitted to the U.S.Treasury on March 15 of the following year.When should the taxes be reported as a liability?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

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

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

If a company borrows money from its bank and the bank deducts the interest in advance,the company would record the amount of the interest deduction as

Creation Corp.stands to receive a sufficient cash settlement from a law suit.Creation needs to record this on its accounting records.

If a company purchases $3,000 worth of inventory with terms of 1/15,n30 and pays within 15 days,then the amount paid to the seller would be

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

Actuarial,Inc.recorded $97,000 in salary expense for January,2013.Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000.How much was paid in cash for salaries during January,2013?

Interest payable on a loan becomes a liability:

If the annual interest is 12%,but the compounding is done quarterly,then the interest rate is 4% per period.

There are some liabilities,such as income tax payable,for which the amounts must be estimated.Failure to estimate these amounts and record them would be a violation of the

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

Estimated liability for product warranties to be paid in the future is a current liability.

An obligation that involves an existing condition for which the outcome is not known with certainty and depends on some event that will occur in the future is call a(n)___________________________.

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

A firm's year ends on December 31.Its tax is computed and submitted to the U.S.Treasury on March 15 of the following year.When should the taxes be reported as a liability?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters