Question 1

What type of account is Discount on Notes Payable?

Accepted Answer

A) Liability. 
B) Contra liability. 
C) Contra asset. 
D) Expense. 
A) Liability. 
B) Contra liability. 
C) Contra asset. 
D) Expense. B

Question 2

Indicate whether each of the following statements is true or false.
_____ a) The extension of a warranty on goods sold normally represents a legal liability to the seller.
_____ b) The entry to recognize the warranty obligation increases the Warranties Payable account and the Warranties Expense account.
_____ c) The entry to record the repairs provided to customers under the terms of product warranties increase Warranties Expense and decrease the Warranties Payable account.
_____ d) Net income is not affected by the entry to record the completion of warranty work.
_____ e) Total assets are not affected by the end-of-period entry to record the warranty obligation.

Accepted Answer

a) True b) True c) False d) True e) True
Explanation: a) This is true. Offering a warranty creates a legal obligation on the part of the seller.
b) This is true. The adjusting entry increases warranties payable, a liability, and warranties expense.
c) This is false. The entry to record warranty repairs usually decreases cash (or could increase an account such as wages payable or decrease inventory) and decreases warranties payable.
d) This is true. The entry to record warranty work does not affect revenues or expenses, and thus is does not affect net income.
e) This is true. The end-of-period entry is a claims exchange transaction that increases liabilities (warranties payable) and increases warranties expense, which reduces equity.

Question 3

Payment of interest on a note payable is considered a financing activity on the statement of cash flows.

Accepted Answer

A) True 
 B)False  False

Question 4

Chenowith Company paid salary expense for employees who are subject to tax withholding. The salaries had not been previously accrued.

Accepted Answer

(D) (I) (D) (N) (I) (D) (D)
Explanation:

Question 5

Creditors are primary users of financial statements. What ratio based on a classified balance sheet can be used by creditors to evaluate a company's liquidity? How is this ratio calculated?

Accepted Answer

The current ratio is a widely

Question 6

On October 1, 2012, Kissimmee Co. issued a one-year discount note with a face value of $50,000 and interest of 8% to the Sunshine Bank and received cash in the amount of $46,000.

Accepted Answer

(I) (I) (N) (N) (N) (N) (I)
Explanation:

Question 7

Choose the correct answer to complete the following: Discount notes....

Accepted Answer

A) are recorded in the account "notes payable" at face value on the day of issue. 
B) are recorded in the account "notes payable" at more than face value on the day of issue. 
C) are recorded in the account "notes payable" at less than face value on the day of issue. 
D) are not recorded until the maturity date. 
A) are recorded in the account "notes payable" at face value on the day of issue. 
B) are recorded in the account "notes payable" at more than face value on the day of issue. 
C) are recorded in the account "notes payable" at less than face value on the day of issue. 
D) are not recorded until the maturity date.

Question 8

Wilson Company issued a $33,000, 8% note payable, with a one year term on September 1, 2012. What amount of interest expense will be recognized on the income statement for 2012? 2013?

Accepted Answer

Interest expense for 2012 = $8

Question 9

How is the carrying value of a discount note payable computed?

Accepted Answer

Face amount of the n

Question 10

Chenowith Company paid Jason Hewitt for work he performed as an independent contractor. The work had not been previously accrued.

Accepted Answer

(D) (N) (D) (N) (I) (D) (D)
Explanation:

Question 11

Indicate whether each of the following statements is true or false.
_____ a) An eight month, 6% note for $20,000 will require the issuer to pay $1,200 in interest.
_____ b) Interest expense is not considered an operating expense on the income statement.
_____ c) Payment of interest is considered an operating activity on the statement of cash flows.
_____ d) Payment of interest on a one-year note due on March 1 will include a reduction in liabilities.
_____ e) The adjusting entry to recognize interest expense is an asset use transaction.

Accepted Answer

a) False b) True c) True d) True e) Fals

Question 12

Gilson Company pays Matt Sawyer a salary of $2,000 per week. How much FICA tax must Gilson pay on Matt's behalf, including both the employee and employer portions?

Accepted Answer

A) $150.00. 
B) $300.00. 
C) $0.00 Matt is responsible for making his own payments. 
D) $240. 
A) $150.00. 
B) $300.00. 
C) $0.00 Matt is responsible for making his own payments. 
D) $240.

Question 13

What factor distinguishes an employee from an independent contractor?

Accepted Answer

A) The amount of their pay. 
B) Whether or not the work is performed on company property. 
C) Whether or not the company supervises and controls the work. 
D) Whether the individual chooses to be treated as an independent contractor. 
A) The amount of their pay. 
B) Whether or not the work is performed on company property. 
C) Whether or not the company supervises and controls the work. 
D) Whether the individual chooses to be treated as an independent contractor.

Question 14

At the beginning of 2013, MacKenzie, Inc. had a balance in the Warranty Payable account of $5,600. During the year MacKenzie sold for $250,000 several products that carried a two-year warranty. MacKenzie estimated that warranty expense would be 6% of sales for the year.
a) Prepare MacKenzie's year-end adjusting journal entry for warranty expense.
b) If MacKenzie's incurred actual warranty cost is $11,500 during 2013, what is the balance in the Warranties Payable account after the adjusting entry is made?

Accepted Answer

The answer of At the beginning of 2013, MacKenzie, Inc....

Question 15

Receivables are normally reported on the balance sheet at net realizable value. In contrast, payables are carried at face value. Which accounting principle requires this treatment of payables?

Accepted Answer

A) Materiality concept. 
B) Going concern assumption. 
C) Monetary unit assumption. 
D) Matching concept. 
A) Materiality concept. 
B) Going concern assumption. 
C) Monetary unit assumption. 
D) Matching concept.

Question 16

Kirk Co. sells goods to customers with a three-year warranty. During 2012, Kirk sold $500,000 of goods. On December 31, 2012, Kirk made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year. During 2013, Kirk paid $400 cash to satisfy warranty claims. Show the effects of the 2013 payments to satisfy warranty claims.

Accepted Answer

(D) (D) (N) (N) (N) (N) (D)
Explanation:

Question 17

After accruing all interest expense due as of April 1, 2013, Bowers Company made the cash payment for the full amount due (i.e., principal and interest) to Mid-Rivers Bank. Select the answer that shows how the cash payment will affect Bowers' financial statements.

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 18

Sales tax is reported as revenue when it is collected, and reported as an expense when it is paid.

Accepted Answer

A) True 
 B)False

Question 19

The term used to describe the ability to generate short-term cash flows is:

Accepted Answer

A) Profitability 
B) Solvency 
C) Stockholder's Equity 
D) Liquidity 
A) Profitability 
B) Solvency 
C) Stockholder's Equity 
D) Liquidity

Question 20

How is the current ratio calculated, and what is its significance in the Analyze of financial statement information?

Accepted Answer

The current ratio is calculate

What type of account is Discount on Notes Payable?

Payment of interest on a note payable is considered a financing activity on the statement of cash flows.

Chenowith Company paid salary expense for employees who are subject to tax withholding. The salaries had not been previously accrued.

Creditors are primary users of financial statements. What ratio based on a classified balance sheet can be used by creditors to evaluate a company's liquidity? How is this ratio calculated?

On October 1, 2012, Kissimmee Co. issued a one-year discount note with a face value of $50,000 and interest of 8% to the Sunshine Bank and received cash in the amount of $46,000.

Choose the correct answer to complete the following: Discount notes....

Wilson Company issued a $33,000, 8% note payable, with a one year term on September 1, 2012. What amount of interest expense will be recognized on the income statement for 2012? 2013?

How is the carrying value of a discount note payable computed?

Chenowith Company paid Jason Hewitt for work he performed as an independent contractor. The work had not been previously accrued.

Gilson Company pays Matt Sawyer a salary of $2,000 per week. How much FICA tax must Gilson pay on Matt's behalf, including both the employee and employer portions?

What factor distinguishes an employee from an independent contractor?

Receivables are normally reported on the balance sheet at net realizable value. In contrast, payables are carried at face value. Which accounting principle requires this treatment of payables?

After accruing all interest expense due as of April 1, 2013, Bowers Company made the cash payment for the full amount due (i.e., principal and interest) to Mid-Rivers Bank. Select the answer that shows how the cash payment will affect Bowers' financial statements.

Sales tax is reported as revenue when it is collected, and reported as an expense when it is paid.

The term used to describe the ability to generate short-term cash flows is:

How is the current ratio calculated, and what is its significance in the Analyze of financial statement information?

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

Filters

Exam 9: Accounting for Current Liabilities and Payroll

What type of account is Discount on Notes Payable?

Payment of interest on a note payable is considered a financing activity on the statement of cash flows.

Chenowith Company paid salary expense for employees who are subject to tax withholding. The salaries had not been previously accrued.

Creditors are primary users of financial statements. What ratio based on a classified balance sheet can be used by creditors to evaluate a company's liquidity? How is this ratio calculated?

On October 1, 2012, Kissimmee Co. issued a one-year discount note with a face value of $50,000 and interest of 8% to the Sunshine Bank and received cash in the amount of $46,000.

Choose the correct answer to complete the following: Discount notes....

Wilson Company issued a $33,000, 8% note payable, with a one year term on September 1, 2012. What amount of interest expense will be recognized on the income statement for 2012? 2013?

How is the carrying value of a discount note payable computed?

Chenowith Company paid Jason Hewitt for work he performed as an independent contractor. The work had not been previously accrued.

Gilson Company pays Matt Sawyer a salary of $2,000 per week. How much FICA tax must Gilson pay on Matt's behalf, including both the employee and employer portions?

What factor distinguishes an employee from an independent contractor?

Receivables are normally reported on the balance sheet at net realizable value. In contrast, payables are carried at face value. Which accounting principle requires this treatment of payables?

After accruing all interest expense due as of April 1, 2013, Bowers Company made the cash payment for the full amount due (i.e., principal and interest) to Mid-Rivers Bank. Select the answer that shows how the cash payment will affect Bowers' financial statements.

Sales tax is reported as revenue when it is collected, and reported as an expense when it is paid.

The term used to describe the ability to generate short-term cash flows is:

How is the current ratio calculated, and what is its significance in the Analyze of financial statement information?

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

Filters