Question 1

The province of Alberta has the lowest PST rate in Canada of 3%.

Accepted Answer

A) True 
 B)False

Question 2

The rate of provincial sales taxes is the same in every province.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are estimated liabilities except:

Accepted Answer

A) corporate income tax payable. 
B) vacation pay payable. 
C) employee income tax payable. 
D) warranty payable. 
A) corporate income tax payable. 
B) vacation pay payable. 
C) employee income tax payable. 
D) warranty payable.

Question 4

A company gives a $50,000, 60-day note at the bank at 7%. How much will the company pay the bank at maturity?

Accepted Answer

A) $50,287.67 
B) $49,424.66 
C) $49,712.33 
D) $50,575.34 
A) $50,287.67 
B) $49,424.66 
C) $49,712.33 
D) $50,575.34

Question 5

The entry to record unearned revenue received in advance includes a debit to unearned revenue and a credit to cash.

Accepted Answer

A) True 
 B)False

Question 6

Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:

Accepted Answer

A) the recognition criteria for revenues. 
B) the matching objective. 
C) the full-disclosure principle. 
D) conservatism. 
A) the recognition criteria for revenues. 
B) the matching objective. 
C) the full-disclosure principle. 
D) conservatism.

Question 7

What entry is required when a business estimates warranty payable each period based on sales revenue?

Accepted Answer

A)  $\begin{array} { |l|} 
\hline
Estimated ~Warranty ~Payable\
\hline
Warranty ~Expense\
\hline
\end{array}$ 
B)  $\begin{array} { |l|} 
\hline
Warranty ~Expense\
\hline
Sales\
\hline
\end{array}$ 
C)  $\begin{array} { |l|} 
\hline
Warranty ~Expense\
\hline
Estimated~ Warranty ~Payable\
\hline
\end{array}$ 
D)  $\begin{array} { |l|} 
\hline
Inventory\
\hline
Estimated ~Warranty ~Payable\
\hline
\end{array}$ 
A)  $\begin{array} { |l|} 
\hline
Estimated ~Warranty ~Payable\
\hline
Warranty ~Expense\
\hline
\end{array}$ 
B)  $\begin{array} { |l|} 
\hline
Warranty ~Expense\
\hline
Sales\
\hline
\end{array}$ 
C)  $\begin{array} { |l|} 
\hline
Warranty ~Expense\
\hline
Estimated~ Warranty ~Payable\
\hline
\end{array}$ 
D)  $\begin{array} { |l|} 
\hline
Inventory\
\hline
Estimated ~Warranty ~Payable\
\hline
\end{array}$

Question 8

Bachman Merchandising has ten employees who each earn $180 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued for the group at the end of the month is:

Accepted Answer

A) $1,800. 
B) $180. 
C) $270. 
D) $2,700. 
A) $1,800. 
B) $180. 
C) $270. 
D) $2,700.

Question 9

The methods of recording GST and HST are similar.

Accepted Answer

A) True 
 B)False

Question 10

A corporation's journal entry to accrue income tax owed at year end includes a debit to income tax payable.

Accepted Answer

A) True 
 B)False

Question 11

Table 11-13
Arc Digital starts the year with balances in its Estimated warranty payable account and Warranty expense account as shown below. During the year, there were $190,000 of sales and $3,200 of warranty repair payments. Arc Digital estimates warranty expense at 1.5% of sales.  
-Refer to Table 11-13. At the end of the year, what was the balance in the warranty expense account?

Accepted Answer

A) $2,850 debit 
B) $1,250 credit 
C) $3,200 debit 
D) $1,420 debit 
A) $2,850 debit 
B) $1,250 credit 
C) $3,200 debit 
D) $1,420 debit

Question 12

Sales revenue for Joe's Sporting Goods for the current period amounted to $215,000. Joe's Sporting Goods records GST when merchandise is sold. All sales are on account. The GST rate is 5%. The journal entry would include a debit to:

Accepted Answer

A) Accounts Receivable for $215,000. 
B) Accounts Receivable for $225,750. 
C) GST Payable for $10,750. 
D) Sales Revenue for $215,000. 
A) Accounts Receivable for $215,000. 
B) Accounts Receivable for $225,750. 
C) GST Payable for $10,750. 
D) Sales Revenue for $215,000.

Question 13

A contingent liability that has a remote chance of occurrence and an uncertain amount 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 14

The journal entry to remit GST to the Receiver General includes:

Accepted Answer

A) credit to GST Payable. 
B) debit to GST Recoverable. 
C) credit to GST Recoverable and debit to GST Payable. 
D) debit to GST Recoverable and credit to GST Payable. 
A) credit to GST Payable. 
B) debit to GST Recoverable. 
C) credit to GST Recoverable and debit to GST Payable. 
D) debit to GST Recoverable and credit to GST Payable.

Question 15

Liabilities that exist but whose exact amount is not known must be:

Accepted Answer

A) ignored. 
B) estimated. 
C) reported in the notes to the financial statements. 
D) treated as a contingent liability. 
A) ignored. 
B) estimated. 
C) reported in the notes to the financial statements. 
D) treated as a contingent liability.

Question 16

The only way to reduce a current liability is to pay out cash.

Accepted Answer

A) True 
 B)False

Question 17

Operating lines of credit are popular because they do not carry any interest charges.

Accepted Answer

A) True 
 B)False

Question 18

Unearned revenue represents revenue that has:

Accepted Answer

A) been earned and collected. 
B) been earned but not yet collected. 
C) been collected but not yet earned. 
D) not been collected nor earned. 
A) been earned and collected. 
B) been earned but not yet collected. 
C) been collected but not yet earned. 
D) not been collected nor earned.

Question 19

Interest payable is a contra liability account and is deducted from the note payable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

The matching objective requires that companies record warranty expense at the time the repair is made.

Accepted Answer

A) True 
 B)False

The province of Alberta has the lowest PST rate in Canada of 3%.

The rate of provincial sales taxes is the same in every province.

All of the following are estimated liabilities except:

A company gives a $50,000, 60-day note at the bank at 7%. How much will the company pay the bank at maturity?

The entry to record unearned revenue received in advance includes a debit to unearned revenue and a credit to cash.

Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:

What entry is required when a business estimates warranty payable each period based on sales revenue?

Bachman Merchandising has ten employees who each earn $180 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued for the group at the end of the month is:

The methods of recording GST and HST are similar.

A corporation's journal entry to accrue income tax owed at year end includes a debit to income tax payable.

Sales revenue for Joe's Sporting Goods for the current period amounted to $215,000. Joe's Sporting Goods records GST when merchandise is sold. All sales are on account. The GST rate is 5%. The journal entry would include a debit to:

A contingent liability that has a remote chance of occurrence and an uncertain amount should be:

The journal entry to remit GST to the Receiver General includes:

Liabilities that exist but whose exact amount is not known must be:

The only way to reduce a current liability is to pay out cash.

Operating lines of credit are popular because they do not carry any interest charges.

Unearned revenue represents revenue that has:

Interest payable is a contra liability account and is deducted from the note payable on the balance sheet.

The matching objective requires that companies record warranty expense at the time the repair is made.

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

The province of Alberta has the lowest PST rate in Canada of 3%.

The rate of provincial sales taxes is the same in every province.

All of the following are estimated liabilities except:

A company gives a $50,000, 60-day note at the bank at 7%. How much will the company pay the bank at maturity?

The entry to record unearned revenue received in advance includes a debit to unearned revenue and a credit to cash.

Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:

What entry is required when a business estimates warranty payable each period based on sales revenue?

Bachman Merchandising has ten employees who each earn $180 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued for the group at the end of the month is:

The methods of recording GST and HST are similar.

A corporation's journal entry to accrue income tax owed at year end includes a debit to income tax payable.

Sales revenue for Joe's Sporting Goods for the current period amounted to $215,000. Joe's Sporting Goods records GST when merchandise is sold. All sales are on account. The GST rate is 5%. The journal entry would include a debit to:

A contingent liability that has a remote chance of occurrence and an uncertain amount should be:

The journal entry to remit GST to the Receiver General includes:

Liabilities that exist but whose exact amount is not known must be:

The only way to reduce a current liability is to pay out cash.

Operating lines of credit are popular because they do not carry any interest charges.

Unearned revenue represents revenue that has:

Interest payable is a contra liability account and is deducted from the note payable on the balance sheet.

The matching objective requires that companies record warranty expense at the time the repair is made.

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