Question 1

A company gives a $40,000, six-month note at the bank at 8%. How much will the company pay the bank at maturity?

Accepted Answer

A) $40,000 
B) $43,200 
C) $41,600 
D) $38,400 
A) $40,000 
B) $43,200 
C) $41,600 
D) $38,400

Question 2

Stardust Company issued a five-year, interest-bearing note payable for $50,000 on January 1, 2019. Each January, Stardust is required to pay $10,000 principal on the note. What is the amount that will be reported on the current portion of long-term notes payable on the December 31, 2020 balance sheet?

Accepted Answer

A) $10,000 
B) $0 
C) $30,000 
D) $20,000 
A) $10,000 
B) $0 
C) $30,000 
D) $20,000

Question 3

The law requires most employers to provide a minimum number of weeks holiday per year.

Accepted Answer

A) True 
 B)False

Question 4

A contingent gain that is likely and can be reasonably estimated should be:

Accepted Answer

A) disclosed in a note to the financial statements. 
B) accrued with a journal entry. 
C) either disclosed in a note or accrued with a journal entry. 
D) ignored until the actual gain materializes. 
A) disclosed in a note to the financial statements. 
B) accrued with a journal entry. 
C) either disclosed in a note or accrued with a journal entry. 
D) ignored until the actual gain materializes.

Question 5

A contingent liability that is likely and can be reasonably estimated should be:

Accepted Answer

A) disclosed in a note to the financial statements. 
B) accrued with a journal entry. 
C) either disclosed in a note or accrued with a journal entry. 
D) ignored until the liability materializes. 
A) disclosed in a note to the financial statements. 
B) accrued with a journal entry. 
C) either disclosed in a note or accrued with a journal entry. 
D) ignored until the liability materializes.

Question 6

Sales revenue for Booker Company for 2019 amounted to $800,000. The products sold carry a six-month warranty. Management estimates the cost of the warranty to be 3% of sales revenue. Booker should:

Accepted Answer

A) debit Warranty Expense in 2019 for $24,000. 
B) debit Estimated Warranty Payable in 2019 for $24,000. 
C) debit Warranty Expense when the products are repaired or replaced in either 2019 or 2020. 
D) credit Estimated Warranty Payable in either 2019 or 2020 when the products are repaired or replaced. 
A) debit Warranty Expense in 2019 for $24,000. 
B) debit Estimated Warranty Payable in 2019 for $24,000. 
C) debit Warranty Expense when the products are repaired or replaced in either 2019 or 2020. 
D) credit Estimated Warranty Payable in either 2019 or 2020 when the products are repaired or replaced.

Question 7

Long-term debt refers to obligations that have to be paid within a year of the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 8

In some provinces individual consumers must pay both HST and PST.

Accepted Answer

A) True 
 B)False

Question 9

Short-term notes payable:

Accepted Answer

A) are an unusual form of financing. 
B) are generally due within one year. 
C) are classified on the balance sheet as non-current. 
D) are shown on the balance sheet as a reduction to notes receivable. 
A) are an unusual form of financing. 
B) are generally due within one year. 
C) are classified on the balance sheet as non-current. 
D) are shown on the balance sheet as a reduction to notes receivable.

Question 10

Corporations and individuals both pay income tax.

Accepted Answer

A) True 
 B)False

Question 11

Current portion of long-term debt refers to the amount of principle on a note payable that must be paid within a year or an operating cycle.

Accepted Answer

A) True 
 B)False

Question 12

Because contingent liabilities are not real liabilities, they are easy to overlook.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following liabilities creates no expense on the part of the company?

Accepted Answer

A) Employment Insurance payable 
B) Canada Pension Plan payable 
C) GST payable 
D) estimated warranty payable 
A) Employment Insurance payable 
B) Canada Pension Plan payable 
C) GST payable 
D) estimated warranty payable

Question 14

Vacation pay expense should be debited:

Accepted Answer

A) when the employee takes vacation. 
B) when the employee has performed a service to the company and earned the vacation. 
C) is never debited. 
D) when the employee returns from vacation. 
A) when the employee takes vacation. 
B) when the employee has performed a service to the company and earned the vacation. 
C) is never debited. 
D) when the employee returns from vacation.

Question 15

A company borrows $15,000 on November 1, 2019, giving a 6%, 90-day note payable. The adjusting entry on December 31, 2019, would include a:

Accepted Answer

A) credit to Interest Payable for $73.97. 
B) credit to Interest Payable for $147.95. 
C) debit to Interest Expense for $221.92. 
D) credit to Cash for $147.95. 
A) credit to Interest Payable for $73.97. 
B) credit to Interest Payable for $147.95. 
C) debit to Interest Expense for $221.92. 
D) credit to Cash for $147.95.

Question 16

Franconia Sales offers warranties on all their electronic goods. Warranty expense is estimated at 2% of sales revenue. In 2019, Franconia had $500,000 of sales. In the same year, Franconia paid out $7,500 of warranty payments. Which of the following is the entry needed to record the disbursement of warranty payments?

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Estimated warranty payable } & 7,500 & \
\hline \text { Cash } & & 7,500 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 7,500 & \
\hline \text { Estimated warranty payable } & & 7,500 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Estimated warranty payable } & & 10,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Sales revenue } & & 10,000 \
\hline
\end{array}$ 
A)  $\begin{array} { | c | r | r | } 
\hline \text { Estimated warranty payable } & 7,500 & \
\hline \text { Cash } & & 7,500 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 7,500 & \
\hline \text { Estimated warranty payable } & & 7,500 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Estimated warranty payable } & & 10,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Sales revenue } & & 10,000 \
\hline
\end{array}$

Question 17

Warranty expense is debited:

Accepted Answer

A) in the period the product under warranty is repaired or replaced. 
B) in the period the revenue from selling the product was earned. 
C) the timing will depend on the length of the warranty period. 
D) in the period when the payment for the sale is received. 
A) in the period the product under warranty is repaired or replaced. 
B) in the period the revenue from selling the product was earned. 
C) the timing will depend on the length of the warranty period. 
D) in the period when the payment for the sale is received.

Question 18

An unearned revenue arises when a company receives cash from its customers in advance of earning the revenue.

Accepted Answer

A) True 
 B)False

Question 19

Amounts owed to suppliers for products or services purchased on open accounts are called:

Accepted Answer

A) notes payable. 
B) unearned revenues. 
C) accounts payable. 
D) accrued expenses. 
A) notes payable. 
B) unearned revenues. 
C) accounts payable. 
D) accrued expenses.

Question 20

Most lines of credit are payable on demand.

Accepted Answer

A) True 
 B)False

A company gives a $40,000, six-month note at the bank at 8%. How much will the company pay the bank at maturity?

The law requires most employers to provide a minimum number of weeks holiday per year.

A contingent gain that is likely and can be reasonably estimated should be:

A contingent liability that is likely and can be reasonably estimated should be:

Sales revenue for Booker Company for 2019 amounted to $800,000. The products sold carry a six-month warranty. Management estimates the cost of the warranty to be 3% of sales revenue. Booker should:

Long-term debt refers to obligations that have to be paid within a year of the balance sheet date.

In some provinces individual consumers must pay both HST and PST.

Short-term notes payable:

Corporations and individuals both pay income tax.

Current portion of long-term debt refers to the amount of principle on a note payable that must be paid within a year or an operating cycle.

Because contingent liabilities are not real liabilities, they are easy to overlook.

Which of the following liabilities creates no expense on the part of the company?

Vacation pay expense should be debited:

A company borrows $15,000 on November 1, 2019, giving a 6%, 90-day note payable. The adjusting entry on December 31, 2019, would include a:

Warranty expense is debited:

An unearned revenue arises when a company receives cash from its customers in advance of earning the revenue.

Amounts owed to suppliers for products or services purchased on open accounts are called:

Most lines of credit are payable on demand.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Filters

Exam 11: Current Liabilities and Payroll

A company gives a $40,000, six-month note at the bank at 8%. How much will the company pay the bank at maturity?

The law requires most employers to provide a minimum number of weeks holiday per year.

A contingent gain that is likely and can be reasonably estimated should be:

A contingent liability that is likely and can be reasonably estimated should be:

Sales revenue for Booker Company for 2019 amounted to $800,000. The products sold carry a six-month warranty. Management estimates the cost of the warranty to be 3% of sales revenue. Booker should:

Long-term debt refers to obligations that have to be paid within a year of the balance sheet date.

In some provinces individual consumers must pay both HST and PST.

Short-term notes payable:

Corporations and individuals both pay income tax.

Current portion of long-term debt refers to the amount of principle on a note payable that must be paid within a year or an operating cycle.

Because contingent liabilities are not real liabilities, they are easy to overlook.

Which of the following liabilities creates no expense on the part of the company?

Vacation pay expense should be debited:

A company borrows $15,000 on November 1, 2019, giving a 6%, 90-day note payable. The adjusting entry on December 31, 2019, would include a:

Warranty expense is debited:

An unearned revenue arises when a company receives cash from its customers in advance of earning the revenue.

Amounts owed to suppliers for products or services purchased on open accounts are called:

Most lines of credit are payable on demand.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Filters