Question 1

The operating cash flow ratio is calculated by dividing the cash flows from operating activities by current liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Sales taxes collected from customers should be recorded in a liability account until the cash is passed along to the taxing authority.

Accepted Answer

A) True 
 B)False

Question 3

On August 3, 2012, Grace Electric Supply agreed to manufacture and supply 650 electrical control units for a particular customer who deposited $136,500 toward the purchase price upon signing the one-year purchase agreement, which set the selling price of each control unit at $1,050. In December 2012, 125 units were delivered to the customer and the remaining units were delivered in January 2013. The customer pays in cash upon delivery for any units not covered by the deposit.

Accepted Answer

The answer of On August 3, 2012, Grace Electric Supply...

Question 4

A company borrowed $50,000 on November 1, 2012, at 9% interest. The interest and principal are due on October 31, 2013.
Prepare the company's journal entries on November 1, 2012, December 31, 2012, and October 31, 2013.

Accepted Answer

The answer of A company borrowed $50,000 on November 1,...

Question 5

General Lighting
During the first quarter of 2013, the company sold 4,000 batteries on credit for $150 each plus state sales tax of 6%.
-Refer to General Lighting. The $150 price of each battery includes a $3 federal excise tax. Which of the following statements is true regarding the proper accounting treatment for the taxes related to this transaction?

Accepted Answer

A) They are recorded as additions to revenue. 
B) They are recorded as unearned revenues on the company's balance sheet. 
C) They are recorded as a current liability owed to the taxing authority. 
D) They are recorded as expenses in the same period as the corresponding sales revenue. 
A) They are recorded as additions to revenue. 
B) They are recorded as unearned revenues on the company's balance sheet. 
C) They are recorded as a current liability owed to the taxing authority. 
D) They are recorded as expenses in the same period as the corresponding sales revenue.

Question 6

During 2013, Gardner Home Center sold 800 power washers for $350 each. The power washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will average 2% of sales. How much warranty expense should be accrued as a result of the 2013 sales of this product?

Accepted Answer

A) $8,400 
B) $5,600 
C) $2,800 
D) No liability should be recorded until units are brought in for repairs. 
A) $8,400 
B) $5,600 
C) $2,800 
D) No liability should be recorded until units are brought in for repairs.

Question 7

____________________ is the liability created when customers pay for goods or services in advance.

Accepted Answer

The answer of ____________________ is the liability created when customers...

Question 8

-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the following liquidity ratios for 2013 and 2012:
   Comment on the direction and significance of the change in the ratios from 2012 to 2013.

Accepted Answer

The current ratio is computed by dividin

Question 9

A company has total assets of $350,000 consisting of current assets of $115,000, property, plant, and equipment of $200,000, and other assets of $35,000. The company has total liabilities of $100,000 consisting of current liabilities of $65,000 and other liabilities of $35,000. What is the current ratio?

Accepted Answer

A) 3.50 
B) 1.15 
C) 1.77 
D) 5.38 
A) 3.50 
B) 1.15 
C) 1.77 
D) 5.38

Question 10

Match each of the following current liabilities with its meaning.
a. Account payable
b. Note payable
c. Wages payable
d. Interest payable
e. Sales taxes payable
f. FICA taxes payable
g. Unemployment taxes payable
h. Unearned sales revenues
i. Estimated warranty liability
-Social security and medicare taxes owed.

Accepted Answer

The answer of Match each of the following current liabilities...

Question 11

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.)
a.Employee
b.Employer
c.Both
-State income taxes

Accepted Answer

The answer of For each of the types of payroll...

Question 12

Which of the following statements regarding liabilities is true?

Accepted Answer

A) Liabilities must be legally enforceable to a known recipient. 
B) Liabilities arise from past activities that require some future sacrifice of economic benefits. 
C) The accounting principles followed in the U.S. require that current liabilities be listed in order of decreasing amounts on the balance sheet. 
D) The accounting principles followed in the U.S. differ substantially from those of other countries, especially with respect to current liabilities. 
A) Liabilities must be legally enforceable to a known recipient. 
B) Liabilities arise from past activities that require some future sacrifice of economic benefits. 
C) The accounting principles followed in the U.S. require that current liabilities be listed in order of decreasing amounts on the balance sheet. 
D) The accounting principles followed in the U.S. differ substantially from those of other countries, especially with respect to current liabilities.

Question 13

A contingent liability must be recorded if it is reasonably possible and the amount can be reasonably estimated.

Accepted Answer

A) True 
 B)False

Question 14

Assume a company has a current ratio of 2. Payment of accrued wages payable would cause the current ratio to

Accepted Answer

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

Question 15

Georgia's Salon
The salon sells $50,000 of gift cards in May 2013. These gift cards may be used anytime before their expiration on May 31, 2014.
-Refer to Georgia's Salon. On May 31, 2013, all but $1,500 of the gift cards had been redeemed for salon services. Which of the following is the correct journal entry to record for the expired gift cards?

Accepted Answer

A) Unearned Sales Revenue 1,500 Accounts Payable 1,500 
B) Unearned Sales Revenue 1,500 Sales Revenue 1,500 
C) Loss on Gift Cards 1,500 Sales Revenue 1,500 
D) No entry is necessary. 
A) Unearned Sales Revenue 1,500 Accounts Payable 1,500 
B) Unearned Sales Revenue 1,500 Sales Revenue 1,500 
C) Loss on Gift Cards 1,500 Sales Revenue 1,500 
D) No entry is necessary.

Question 16

The current ratio is computed by dividing current assets by ____________________.

Accepted Answer

The answer of The current ratio is computed by dividing...

Question 17

When a retail company sells products to customers on credit for the amount of the sales price plus the applicable sales tax, the related journal entry includes a debit to accounts receivable, a credit to sales revenue, and a credit to ____________________.

Accepted Answer

The answer of When a retail company sells products to...

Question 18

The quick ratio is calculated as follows: (Cash + Marketable Securities + Accounts Receivable)/ Current Liabilities.

Accepted Answer

A) True 
 B)False

Question 19

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.)
a.Employee
b.Employer
c.Both
-State unemployment taxes

Accepted Answer

The answer of For each of the types of payroll...

Question 20

Match the following terms with the appropriate definition.
a.Accrued liabilities
f.Payroll taxes
b.Contingent liabilities
g.Sales taxes
c.Current liabilities
h.Warranty
d.Interest rate
i.Withholdings
e.Liabilities
-Taxes paid to the government by both employees and employers

Accepted Answer

The answer of Match the following terms with the appropriate...

The operating cash flow ratio is calculated by dividing the cash flows from operating activities by current liabilities.

Sales taxes collected from customers should be recorded in a liability account until the cash is passed along to the taxing authority.

A company borrowed $50,000 on November 1, 2012, at 9% interest. The interest and principal are due on October 31, 2013. Prepare the company's journal entries on November 1, 2012, December 31, 2012, and October 31, 2013.

During 2013, Gardner Home Center sold 800 power washers for $350 each. The power washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will average 2% of sales. How much warranty expense should be accrued as a result of the 2013 sales of this product?

____________________ is the liability created when customers pay for goods or services in advance.

-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the following liquidity ratios for 2013 and 2012: Comment on the direction and significance of the change in the ratios from 2012 to 2013.

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.) a.Employee b.Employer c.Both -State income taxes

Which of the following statements regarding liabilities is true?

A contingent liability must be recorded if it is reasonably possible and the amount can be reasonably estimated.

Assume a company has a current ratio of 2. Payment of accrued wages payable would cause the current ratio to

The current ratio is computed by dividing current assets by ____________________.

When a retail company sells products to customers on credit for the amount of the sales price plus the applicable sales tax, the related journal entry includes a debit to accounts receivable, a credit to sales revenue, and a credit to ____________________.

The quick ratio is calculated as follows: (Cash + Marketable Securities + Accounts Receivable)/ Current Liabilities.

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.) a.Employee b.Employer c.Both -State unemployment taxes

Match the following terms with the appropriate definition. a.Accrued liabilities f.Payroll taxes b.Contingent liabilities g.Sales taxes c.Current liabilities h.Warranty d.Interest rate i.Withholdings e.Liabilities -Taxes paid to the government by both employees and employers

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 8: Current and Contingent Liabilities

The operating cash flow ratio is calculated by dividing the cash flows from operating activities by current liabilities.

Sales taxes collected from customers should be recorded in a liability account until the cash is passed along to the taxing authority.

A company borrowed $50,000 on November 1, 2012, at 9% interest. The interest and principal are due on October 31, 2013. Prepare the company's journal entries on November 1, 2012, December 31, 2012, and October 31, 2013.

During 2013, Gardner Home Center sold 800 power washers for $350 each. The power washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will average 2% of sales. How much warranty expense should be accrued as a result of the 2013 sales of this product?

____________________ is the liability created when customers pay for goods or services in advance.

-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the following liquidity ratios for 2013 and 2012: Comment on the direction and significance of the change in the ratios from 2012 to 2013.

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.) a.Employee b.Employer c.Both -State income taxes

Which of the following statements regarding liabilities is true?

A contingent liability must be recorded if it is reasonably possible and the amount can be reasonably estimated.

Assume a company has a current ratio of 2. Payment of accrued wages payable would cause the current ratio to

The current ratio is computed by dividing current assets by ____________________.

When a retail company sells products to customers on credit for the amount of the sales price plus the applicable sales tax, the related journal entry includes a debit to accounts receivable, a credit to sales revenue, and a credit to ____________________.

The quick ratio is calculated as follows: (Cash + Marketable Securities + Accounts Receivable)/ Current Liabilities.

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.) a.Employee b.Employer c.Both -State unemployment taxes

Match the following terms with the appropriate definition. a.Accrued liabilities f.Payroll taxes b.Contingent liabilities g.Sales taxes c.Current liabilities h.Warranty d.Interest rate i.Withholdings e.Liabilities -Taxes paid to the government by both employees and employers

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters