Question 1

At December 31, 2016, an amount due on December 31, 2017, would be classified as a(n) _______________________ liability.

Accepted Answer

The answer of At December 31, 2016, an amount due...

Question 2

Almost all current liabilities affect the operating category of the statement of cash flows, but one that does not affect cash provided by operating activities is

Accepted Answer

A)  accounts payable. 
B)  interest payable. 
C)  notes payable. 
D)  taxes payable.

Question 3

The ____________________________ of a single sum represents the value today of a single amount to be received or paid at a future time.

Accepted Answer

The answer of The ____________________________ of a single sum represents...

Question 4

Discount on Notes Payable is treated as a reduction of notes payable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

The landlord records the security deposit she collects from the tenant as a(n)

Accepted Answer

A)  asset 
B)  liability 
C)  contingent liability 
D)  contra liability

Question 6

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

Accepted Answer

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

Question 7

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 present value of $7,000 to be received in 7 years at 7% compounded annually is

Accepted Answer

A)  $3,430 
B)  $6,657 
C)  $4,361 
D)  $7,000

Question 8

Which of the following statements is true of liabilities?

Accepted Answer

A)  Accounts payable are listed in the current liabilities section in alphabetical order by vendor. 
B)  Classification of current liabilities is important because of the liquidity concept. 
C)  Current liabilities are listed in order of decreasing amounts in the current liability section of the balance sheet. 
D)  The accounting principles followed in the U.S.differ from those of other countries; this is especially true for current liabilities.

Question 9

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed to a creditor on a note due August 15, 2024.

Accepted Answer

A) Current liability 
B) Long-term liability

Question 10

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 a. $1.338 \times 1.338$.
b. $1 / 1.338$.
c. $1 / ( 1.338 \times 1.338 )$.
d. $0.338$.

Accepted Answer

The answer of The solution to this problem requires time...

Question 11

Match each of the following terms pertaining to liabilities to their definitions.
-Amounts owed that are represented by a formal contractual agreement.These amounts usually require the payment of interest.

Accepted Answer

A) Current liability 
B) Accounts payable 
C) Notes payable 
D) Discount on notes payable 
E) Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Match each of the following terms related to interest and time value of money calculations to their appropriate definition.
-The present amount that is equivalent to an amount at a future time.

Accepted Answer

A) Time value of money 
B) Simple interest 
C) Compound interest 
D) Future value of a single amount 
E) Present value of a single amount
F)Annuity
G)Future value of an annuity
H)Present value of an annuity

Question 14

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

Accepted Answer

A)  increase 
B)  decrease 
C)  be unchanged since the effects offset one another 
D)  be unchanged since it has no impact on any current accounts

Question 15

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

Accepted Answer

A)  $200 
B)  $625 
C)  $1,250 
D)  $2,000

Question 16

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

Accepted Answer

A)  Interest Expense, $600. 
B)  Interest Expense, $1,800. 
C)  Interest Payable, $900. 
D)  Interest Payable, $1,200.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

From the following list, identify whether the change in the account balance during the year would be reported as an operating (O), an investing (I), or a financing (F) activity or not separately reported on the statement of cash flows (N).Assume that the indirect method is used to determine the cash flows from operating activities.
-Accounts payable

Accepted Answer

A) O - Operating 
B) I - Investing 
C) F - Financing 
D) N - Not separately reported on the Statement of Cash Flows

Question 19

All of the following statements are true except:

Accepted Answer

A)  The threshold for recording items as liabilities is a lower under IFRS than under U.S.GAAP. 
B)  The threshold for recording items as liabilities is a lower under U.S.GAAP than under IFRS. 
C)  IFRS requires a liability to be recorded as a present value amount. 
D)  Under U.S.GAAP, a contingent item should be recorded as a liability if the loss or outflow is probable and can be reasonably estimated.

Question 20

An example of a current liability that must be accrued is

Accepted Answer

A)  accounts payable. 
B)  current maturity of long-term debt. 
C)  revenue received in advance. 
D)  income taxes payable.

Exam 9: Current Liabilities, Contingencies, and the True Value of Money

At December 31, 2016, an amount due on December 31, 2017, would be classified as a(n) _______________________ liability.

Almost all current liabilities affect the operating category of the statement of cash flows, but one that does not affect cash provided by operating activities is

The ____________________________ of a single sum represents the value today of a single amount to be received or paid at a future time.

Discount on Notes Payable is treated as a reduction of notes payable on the balance sheet.

The landlord records the security deposit she collects from the tenant as a(n)

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

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 present value of $7,000 to be received in 7 years at 7% compounded annually is

Which of the following statements is true of liabilities?

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to a creditor on a note due August 15, 2024.

Match each of the following terms pertaining to liabilities to their definitions. -Amounts owed that are represented by a formal contractual agreement.These amounts usually require the payment of interest.

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

Match each of the following terms related to interest and time value of money calculations to their appropriate definition. -The present amount that is equivalent to an amount at a future time.

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

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

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

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

All of the following statements are true except:

An example of a current liability that must be accrued is