Exam 8: Current and Contingent Liabilities

Grand Strand Power & Light provides utilities to a gulf coast community. On November 30, 2012, the utility billed 1,500 residential customers a total of $118,500 for electricity. In addition, the company is required to collect state taxes of 1.5% and Federal excise taxes of 0.95%. Both of these taxes are used to fund the energy commission.

A company has property, plant, and equipment of $500,000, current liabilities of $70,000, and long-term liabilities are $300,000. If the company's current ratio is 3.0, what are current assets?

A company has a note payable that is due on December 31, 2013. In its December 31, 2012, balance sheet, this note payable should be classified as a(n)____________________.

A company's employees earn $5,000 per day, work 5 days per week (Monday through Friday), and get paid each Friday. If the previous payday was January 26 and the accounting period ends on January 31, what is the ending balance in the wages payable account?

When accrual basis accounting matches an expense to a period before it is actually paid, an adjusting entry is necessary to record the accrued expense and corresponding liability.

GTX Corp. has $100,000 in cash, $40,000 in inventory, $25,000 in accounts payable and $15,000 in accrued liabilities (salaries, interest, taxes, etc.). If the company has $280,000 in cash flows from operating activities, what is its operating cash flow ratio?

A company's management expects to incur future expenses related to the repair or replacement of defective products sold. Those expenses must be matched to revenues in the period of the repair or replacement.