Question 1

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

Accepted Answer

A) True 
 B)False

Question 2

During August,Radio City sold 200 ipods for $50 each.Each ipod had cost Audio City $31 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during August,the entry to record the Product Warranty Expense is

Accepted Answer

A) Product Warranty Expense 31 Estimated Product Warranty Liability 31 
B) Product Warranty Expense 155 Cash 155 
C) Product Warranty Expense 310 Estimated Product Warranty Liability 310 
D) Estimated Product Warranty Liability 620 Product Warranty Expense 620 
A) Product Warranty Expense 31 Estimated Product Warranty Liability 31 
B) Product Warranty Expense 155 Cash 155 
C) Product Warranty Expense 310 Estimated Product Warranty Liability 310 
D) Estimated Product Warranty Liability 620 Product Warranty Expense 620

Question 3

Which of the following most likely is an estimated liability?

Accepted Answer

A) Liability for vacation pay 
B) Payroll liabilities 
C) Unearned revenues 
D) Current portion of long-term debt 
A) Liability for vacation pay 
B) Payroll liabilities 
C) Unearned revenues 
D) Current portion of long-term debt

Question 4

Based on past experience,it should be possible to estimate the amount that a product warranty will cost the company in the future.

Accepted Answer

A) True 
 B)False

Question 5

Use this information to answer the following question.   What amount must be deposited today to grow to $900 in three years,assuming an APR of 7 percent?

Accepted Answer

A) $662.00 
B) $734.40 
C) $342.98 
D) $841.50 
A) $662.00 
B) $734.40 
C) $342.98 
D) $841.50

Question 6

Which of the following is both an estimated liability and a contingent liability?

Accepted Answer

A) Cosignature on $500 loan 
B) Current portion of long-term debt 
C) Warranty liability 
D) Liability for dividends 
A) Cosignature on $500 loan 
B) Current portion of long-term debt 
C) Warranty liability 
D) Liability for dividends

Question 7

Jeffrey Gray is paid $6 per hour,plus double-time for hours worked on weekends.During the two-week period ending February 5,Jeffrey worked 70 hours on weekdays and 8 hours on weekends.Social Security taxes are 6.2 percent,Medicare taxes are 1.45 percent,$65 is withheld for federal taxes,$18 is withheld for state income taxes,and $24 is withheld for charities.In addition,Jeffrey's employer must pay Social Security taxes of 6.2 percent,Medicare taxes of 1.45 percent,federal unemployment taxes of 0.8 percent,and state unemployment taxes of 5.4 percent.Calculate (a)Jeffrey's gross earnings,(b)Jeffrey's net pay,(c)the employer's payroll taxes expense,and (d)the total cost of employing Jeffrey for the two-week period.Round all amounts to the nearest penny.

Accepted Answer

a.$516.00 [(70 × $6)+ (8 × $12

Question 8

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest.The future value table is used by multiplying the $700 by which factor?

Accepted Answer

A) 28 periods at 3 percent 
B) 7 periods at 3 percent 
C) 7 periods at 12 percent 
D) 28 periods at 7 percent 
A) 28 periods at 3 percent 
B) 7 periods at 3 percent 
C) 7 periods at 12 percent 
D) 28 periods at 7 percent

Question 9

The higher the interest rate assumed,the

Accepted Answer

A) higher the present value of an ordinary annuity. 
B) more one must deposit today to accumulate to a desired sum. 
C) lower the future value of a sum invested in the bank today. 
D) lower the present value of a sum due in the future. 
A) higher the present value of an ordinary annuity. 
B) more one must deposit today to accumulate to a desired sum. 
C) lower the future value of a sum invested in the bank today. 
D) lower the present value of a sum due in the future.

Question 10

At the time a company signs a contract to pay an employee a certain salary in the future,it records a liability.

Accepted Answer

A) True 
 B)False

Question 11

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20.
  The entry on January 20 would be a debit to

Accepted Answer

A) Salaries Payable and a credit to Cash. 
B) Salaries Payable and a credit to Salaries Expense. 
C) Salaries Expense and a credit to Cash. 
D) Salaries Expense and a credit to Salaries Payable. 
A) Salaries Payable and a credit to Cash. 
B) Salaries Payable and a credit to Salaries Expense. 
C) Salaries Expense and a credit to Cash. 
D) Salaries Expense and a credit to Salaries Payable.

Question 12

Payables turnover is measured in number of days.

Accepted Answer

A) True 
 B)False

Question 13

Calculate answers to the following using future value and/or present value tables:
a. If an accumulation of $1,000 is desired at the end of 4 years,what bank deposit must be made now to accomplish that goal,assuming 10 percent interest compounded annually?
b. A deposit of $600 made at the end of every 6 months for 5 years would grow to what amount,assuming 8 percent interest compounded semiannually.

Accepted Answer

a.$683.00 [($1,000 ×

Question 14

Toojay Company manufactures and sells widgets.Each widget costs $60 and sells for $100.Each widget carries a warranty that provides for free replacement if it fails for any reason during the next 36 months.In the past,4 percent of the widgets have had to be replaced under the warranty.During April,Toojay sold 2,000 widgets and replaced 150 under warranty.Calculate the product warranty expense for the month.Show your computation.

Accepted Answer

$4,800 (2,

Question 15

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

Accepted Answer

A) True 
 B)False

Question 16

Calculate answers to the following scenarios using present value tables:
a. If $100 is deposited into an account paying 8 percent simple interest,what will be the value of the account in 5 years?
b. If an accumulation of $8,000 is desired at the end of 4 years,what amount must be deposited now to accomplish that goal,assuming 12 percent interest compounded annually?
c. What is the present value of $300 received at the end of each year for 4 years,assuming 9 percent interest compounded annually?
d. What amount must be deposited at the bank today to grow to $10,000 in 5 years,assuming 14 percent interest compounded semiannually?

Accepted Answer

a.$140 [(100 × 0.08 × 5)+ $100

Question 17

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Accepted Answer

A) True 
 B)False

Question 18

If any portion of a long-term debt is to be paid in the next year,that portion should be classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 19

Use this information to answer the following question. The following totals for the month of September were taken from the payroll register of Meadors Company:
  The journal entry to record the monthly payroll on September 30 would include a

Accepted Answer

A) debit to Salaries Expense for $24,000. 
B) debit to Salaries Payable for $24,000. 
C) credit to Salaries Payable for $24,000. 
D) debit to Salaries Expense for $9,000. 
A) debit to Salaries Expense for $24,000. 
B) debit to Salaries Payable for $24,000. 
C) credit to Salaries Payable for $24,000. 
D) debit to Salaries Expense for $9,000.

Question 20

The amount of property tax payable is usually an estimated liability for a portion of the year.

Accepted Answer

A) True 
 B)False

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

During August,Radio City sold 200 ipods for $50 each.Each ipod had cost Audio City $31 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during August,the entry to record the Product Warranty Expense is

Which of the following most likely is an estimated liability?

Based on past experience,it should be possible to estimate the amount that a product warranty will cost the company in the future.

Use this information to answer the following question. What amount must be deposited today to grow to $900 in three years,assuming an APR of 7 percent?

Which of the following is both an estimated liability and a contingent liability?

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest.The future value table is used by multiplying the $700 by which factor?

The higher the interest rate assumed,the

At the time a company signs a contract to pay an employee a certain salary in the future,it records a liability.

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20. The entry on January 20 would be a debit to

Payables turnover is measured in number of days.

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

If any portion of a long-term debt is to be paid in the next year,that portion should be classified as a current liability.

Use this information to answer the following question. The following totals for the month of September were taken from the payroll register of Meadors Company: The journal entry to record the monthly payroll on September 30 would include a

The amount of property tax payable is usually an estimated liability for a portion of the year.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 11: Current Liabilities and Fair Value Accounting

Assets purchased under a deferred payment plan should be recorded at the present value of the installment payments.

During August,Radio City sold 200 ipods for $50 each.Each ipod had cost Audio City $31 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during August,the entry to record the Product Warranty Expense is

Which of the following most likely is an estimated liability?

Based on past experience,it should be possible to estimate the amount that a product warranty will cost the company in the future.

Use this information to answer the following question. What amount must be deposited today to grow to $900 in three years,assuming an APR of 7 percent?

Which of the following is both an estimated liability and a contingent liability?

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest.The future value table is used by multiplying the $700 by which factor?

The higher the interest rate assumed,the

At the time a company signs a contract to pay an employee a certain salary in the future,it records a liability.

Use this information to answer the following question. Panadora Company has the following information for the pay period of January 1-15,2014.Payment occurs on January 20. The entry on January 20 would be a debit to

Payables turnover is measured in number of days.

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

If any portion of a long-term debt is to be paid in the next year,that portion should be classified as a current liability.

Use this information to answer the following question. The following totals for the month of September were taken from the payroll register of Meadors Company: The journal entry to record the monthly payroll on September 30 would include a

The amount of property tax payable is usually an estimated liability for a portion of the year.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters