Question 1

The entry to record the proceeds upon issuing an interest-bearing note is:

Accepted Answer

A)  Interest Expense
Cash
$\quad $Notes Payable 
B)  Cash
$\quad $Notes Payable 
C)  Notes Payable
$\quad $$\quad $Cash 
D)  Cash
$\quad $$\quad $Notes Payable
$\quad $$\quad $Interest Payable 
A)  Interest Expense
Cash
$\quad $Notes Payable 
B)  Cash
$\quad $Notes Payable 
C)  Notes Payable
$\quad $$\quad $Cash 
D)  Cash
$\quad $$\quad $Notes Payable
$\quad $$\quad $Interest Payable

Question 2

When a company issues a gift card, the company will record the gift card in revenue in the period in which it is sold.

Accepted Answer

A) True 
 B)False

Question 3

Fiddler Music Company, which prepares annual financial statements, is preparing adjusting entries on December 31. Analysis indicates the following:
1. The company is the defendant in an employee discrimination lawsuit involving $50,000 of damages. Legal counsel believes it is unlikely that the company will have to pay any damages.
2. The company is a defendant in a $750,000 product liability lawsuit. Legal counsel believes the company probably will have to pay the amount requested.
3. On November 1, Fiddler signed a $10,000, 6-month, 8% note payable. No interest has been accrued to date.
Instructions
Prepare any adjusting entries necessary at the end of the year.

Accepted Answer

1. No entr

Question 4

Accountants have decided that when a loyalty program results in a reduced future selling price, it should be accounted for as a decrease in

Accepted Answer

A)  revenue. 
B)  expenses. 
C)  assets. 
D)  liabilities. 
A)  revenue. 
B)  expenses. 
C)  assets. 
D)  liabilities.

Question 5

Current maturities of long-term debt

Accepted Answer

A)  require an adjusting entry. 
B)  are optionally reported on the balance sheet. 
C)  can be properly classified during balance sheet preparation, with no adjusting entry required. 
D)  are not considered to be current liabilities. 
A)  require an adjusting entry. 
B)  are optionally reported on the balance sheet. 
C)  can be properly classified during balance sheet preparation, with no adjusting entry required. 
D)  are not considered to be current liabilities.

Question 6

Operating line of credit borrowings usually

Accepted Answer

A)  are credited to a note payable account. 
B)  are reported as a non-current liability. 
C)  are debited to the cash account and result in a current liability. 
D)  are required by all companies. 
A)  are credited to a note payable account. 
B)  are reported as a non-current liability. 
C)  are debited to the cash account and result in a current liability. 
D)  are required by all companies.

Question 7

Warranties are also known as

Accepted Answer

A)  determinable liabilities. 
B)  customer loyalty programs. 
C)  contingencies. 
D)  guarantees. 
A)  determinable liabilities. 
B)  customer loyalty programs. 
C)  contingencies. 
D)  guarantees.

Question 8

A note payable will result in more security of the debt obligation for the creditor than an account payable.

Accepted Answer

A) True 
 B)False

Question 9

Current Liabilities are usually listed in order of liquidity.

Accepted Answer

A) True 
 B)False

Question 10

A liability is defined as a past obligation, arising from present events to make future payments of assets or services.

Accepted Answer

A) True 
 B)False

Question 11

It is NOT necessary to prepare an adjusting entry to recognize the current maturity of long term debt.

Accepted Answer

A) True 
 B)False

Question 12

Match between columns
                        Premises: An obligation in the form of a written promissory note
A debt than can reasonably be expected to be paid from current assets
A potential liability that may become an actual liability in the future

Accepted Answer

The Answer of Notes Payable and Current liability and Contingent is...

Question 13

Under ASPE, a contingency that is NOT likely to occur

Accepted Answer

A)  should be disclosed in the financial statements. 
B)  must be accrued as a loss. 
C)  does not need to be disclosed unless the loss would result in a substantial negative effect on the company's financial position. 
D)  is recorded as a contingent loss. 
A)  should be disclosed in the financial statements. 
B)  must be accrued as a loss. 
C)  does not need to be disclosed unless the loss would result in a substantial negative effect on the company's financial position. 
D)  is recorded as a contingent loss.

Question 14

All of the following are definitely determinable liabilities EXCEPT

Accepted Answer

A)  current maturities of long-term debt. 
B)  operating lines of credit. 
C)  a future commitment to purchase an asset. 
D)  accounts payable. 
A)  current maturities of long-term debt. 
B)  operating lines of credit. 
C)  a future commitment to purchase an asset. 
D)  accounts payable.

Question 15

Contingencies are events with certain outcomes.

Accepted Answer

A) True 
 B)False

Question 16

The relationship of current assets to current liabilities is used in evaluating a company's

Accepted Answer

A)  profitability. 
B)  revenue-producing ability. 
C)  short-term debt paying ability. 
D)  long-range solvency. 
A)  profitability. 
B)  revenue-producing ability. 
C)  short-term debt paying ability. 
D)  long-range solvency.

Question 17

Duane Herman sells exercise machines for home use. The machines carry a 4-year warranty. Past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is $45 for labour and $75 for parts per unit. During 2015, 2,500 exercise machines were sold at an average price of $800. During the year, 60 of the machines that were sold were repaired at the average price per unit. The opening balance in the Warranty Liability account is zero.
a. Prepare the journal entry to record the repairs made under warranty.
b. Prepare the journal entry to record the estimated warranty expense for the year. Determine the balance in the Warranty Liability account at the end of the year.

Accepted Answer

a. Labour on repaired units: $45 × 60 =

Question 18

A note payable is in the form of

Accepted Answer

A)  a contingency that is reasonably likely to occur. 
B)  a written promissory note. 
C)  an oral agreement. 
D)  a standing agreement. 
A)  a contingency that is reasonably likely to occur. 
B)  a written promissory note. 
C)  an oral agreement. 
D)  a standing agreement.

Question 19

An estimated liability is a liability that is known to exist but whose amount and timing are uncertain.

Accepted Answer

A) True 
 B)False

Question 20

The following are general risk contingencies that can affect anyone who is operating a business and are not reported in the notes to the financial statements, EXCEPT

Accepted Answer

A)  war. 
B)  strike. 
C)  lawsuit. 
D)  recession. 
A)  war. 
B)  strike. 
C)  lawsuit. 
D)  recession.

The entry to record the proceeds upon issuing an interest-bearing note is:

When a company issues a gift card, the company will record the gift card in revenue in the period in which it is sold.

Accountants have decided that when a loyalty program results in a reduced future selling price, it should be accounted for as a decrease in

Current maturities of long-term debt

Operating line of credit borrowings usually

Warranties are also known as

A note payable will result in more security of the debt obligation for the creditor than an account payable.

Current Liabilities are usually listed in order of liquidity.

A liability is defined as a past obligation, arising from present events to make future payments of assets or services.

It is NOT necessary to prepare an adjusting entry to recognize the current maturity of long term debt.

Under ASPE, a contingency that is NOT likely to occur

All of the following are definitely determinable liabilities EXCEPT

Contingencies are events with certain outcomes.

The relationship of current assets to current liabilities is used in evaluating a company's

A note payable is in the form of

An estimated liability is a liability that is known to exist but whose amount and timing are uncertain.

The following are general risk contingencies that can affect anyone who is operating a business and are not reported in the notes to the financial statements, EXCEPT

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 10: Current Liabilities

The entry to record the proceeds upon issuing an interest-bearing note is:

When a company issues a gift card, the company will record the gift card in revenue in the period in which it is sold.

Accountants have decided that when a loyalty program results in a reduced future selling price, it should be accounted for as a decrease in

Current maturities of long-term debt

Operating line of credit borrowings usually

Warranties are also known as

A note payable will result in more security of the debt obligation for the creditor than an account payable.

Current Liabilities are usually listed in order of liquidity.

A liability is defined as a past obligation, arising from present events to make future payments of assets or services.

It is NOT necessary to prepare an adjusting entry to recognize the current maturity of long term debt.

Under ASPE, a contingency that is NOT likely to occur

All of the following are definitely determinable liabilities EXCEPT

Contingencies are events with certain outcomes.

The relationship of current assets to current liabilities is used in evaluating a company's

A note payable is in the form of

An estimated liability is a liability that is known to exist but whose amount and timing are uncertain.

The following are general risk contingencies that can affect anyone who is operating a business and are not reported in the notes to the financial statements, EXCEPT

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters