Question 1

The proceeds from advance ticket sales for a concert to be held next month should be recorded as a current liability.

Accepted Answer

A) True 
 B)False

Question 2

A fast food restaurant sells gift cards which may be redeemed at any time; however, they expire in one year. At the time these gift cards are sold, the account to be credited is called ____________________.

Accepted Answer

unearned s

Question 3

A(n)____________________ arises when a business purchases goods or services on credit.

Accepted Answer

The answer of A(n)____________________ arises when a business purchases goods...

Question 4

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
-A contractual agreement to borrow and repay money.

Accepted Answer

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

Question 5

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase

Accepted Answer

A) interest expense by $4,200. 
B) notes payable by $1,050. 
C) interest payable by $1,050. 
D) prepaid interest by $3,150. 
A) interest expense by $4,200. 
B) notes payable by $1,050. 
C) interest payable by $1,050. 
D) prepaid interest by $3,150.

Question 6

A company pays wages of $12,500 at the end of each 5-day work week.

Accepted Answer

The answer of A company pays wages of $12,500 at...

Question 7

What is the impact on the accounting equation of recording the accrual of interest expense?

Accepted Answer

A) Both assets and liabilities decrease. 
B) Both assets and stockholders' equity decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities increase and stockholders' equity decreases. 
A) Both assets and liabilities decrease. 
B) Both assets and stockholders' equity decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities increase and stockholders' equity decreases.

Question 8

Gainesville Truck Center
This company has a weekly payroll of $10,000 for its employees who work Monday through Friday. Federal and state income taxes are withheld in the amounts of $1,700 and $400, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare). In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. The company's year-end is December 31.
-Refer to the information for Gainesville Truck Center. Which of the following statements is true regarding the entry to record wages and the related liabilities?

Accepted Answer

A) FICA tax expense will be debited in the amount of $765. 
B) Social security tax payable will be debited in the amount of $620. 
C) Medicare tax payable will be credited in the amount of $145. 
D) Federal income taxes payable will be credited in the amount of $2,100. 
A) FICA tax expense will be debited in the amount of $765. 
B) Social security tax payable will be debited in the amount of $620. 
C) Medicare tax payable will be credited in the amount of $145. 
D) Federal income taxes payable will be credited in the amount of $2,100.

Question 9

A company has cash of $800, current liabilities of $500, and long-term liabilities of $600. If the cash ratio is 2.5, then marketable securities must be

Accepted Answer

A) $ 700. 
B) $ 800. 
C) $ 450. 
D) $2,000. 
A) $ 700. 
B) $ 800. 
C) $ 450. 
D) $2,000.

Question 10

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
-Federal unemployment taxes

Accepted Answer

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

Question 11

During May 2013, Grant Park Refinery sold, on credit, 1,200,000 gallons of motor fuel at $1.89 each plus Georgia sales tax of 6%. Included in the price per gallon was a $0.42 federal excise tax. All taxes collected are paid to the appropriate taxing authority at the end of the quarter.
Prepare the appropriate journal entries on May 31, 2013, and June 30, 2013.

Accepted Answer

The answer of During May 2013, Grant Park Refinery sold,...

Question 12

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If current liabilities are $14,350, then the quick ratio will be

Accepted Answer

A) 5.0. 
B) 2.6. 
C) 2.0. 
D) 1.2. 
A) 5.0. 
B) 2.6. 
C) 2.0. 
D) 1.2.

Question 13

GT Company has $200 in cash, $500 in accounts receivable, and $700 in inventory. The company also has $200 in accounts payable and $200 in unearned sales revenue. What is the company's quick ratio?

Accepted Answer

A) 1.75 
B) 2.25 
C) 3.00 
D) 3.50 
A) 1.75 
B) 2.25 
C) 3.00 
D) 3.50

Question 14

On August 1, 2013, Genuine Services accepted a $6,000 advance payment from a customer for services to be provided in the future. The contract requires the company to review operations at each of the customer's six locations over the next 6 months. What is the impact on the accounting equation of recording this transaction on August 1st?

Accepted Answer

A) assets and liabilities increase 
B) assets and liabilities decrease 
C) liabilities decrease and stockholders' equity increases 
D) liabilities increase and stockholders' equity decreases 
A) assets and liabilities increase 
B) assets and liabilities decrease 
C) liabilities decrease and stockholders' equity increases 
D) liabilities increase and stockholders' equity decreases

Question 15

A company is required to estimate a liability for repairs for products sold with a warranty. In the year following the sale, the firm's accountants find that the estimated amount for repairs has been overstated. The correct accounting procedure in the year following the sale is to

Accepted Answer

A) make an adjusting entry to reduce the amount of the estimate. 
B) make a correcting entry because the overstatement is an error. 
C) show the amount of overstatement on the income statement as a loss. 
D) do nothing because the misstatement related to the prior year. 
A) make an adjusting entry to reduce the amount of the estimate. 
B) make a correcting entry because the overstatement is an error. 
C) show the amount of overstatement on the income statement as a loss. 
D) do nothing because the misstatement related to the prior year.

Question 16

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. When the company records this transaction, what is the impact on the accounting equation?

Accepted Answer

A) Both assets and liabilities decrease. 
B) Assets decrease and liabilities increase. 
C) Assets, liabilities, and stockholders' equity will all increase. 
D) Assets increase and stockholders' equity decreases. 
A) Both assets and liabilities decrease. 
B) Assets decrease and liabilities increase. 
C) Assets, liabilities, and stockholders' equity will all increase. 
D) Assets increase and stockholders' equity decreases.

Question 17

A cookie company includes one premium coupon in every cookie package. Upon returning 10 such coupons to the company, the customer will be sent a free cookie jar. In a recent year, the company sold 200,000 packages of cookies for $1 per package. It is estimated that 20% of the coupons will be redeemed. If the cookie jars cost the company $3 each, what amount of liability should be recorded?

Accepted Answer

A) $ 6,000 
B) $ 12,000 
C) $120,000 
D) $200,000 
A) $ 6,000 
B) $ 12,000 
C) $120,000 
D) $200,000

Question 18

____________________ are commitments that represent probable future sacrifices of economic benefits.

Accepted Answer

The answer of ____________________ are commitments that represent probable future...

Question 19

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. Which of the following is the correct journal entry to record the sale of the gift cards?

Accepted Answer

A) Cash 50,000 Accounts Payable 50,000 
B) Cash 50,000 Unearned Sales Revenue 50,000 
C) Cash 50,000 Sales Revenue 50,000 
D) Cash 50,000 Prepaid Sales Revenue 50,000 
A) Cash 50,000 Accounts Payable 50,000 
B) Cash 50,000 Unearned Sales Revenue 50,000 
C) Cash 50,000 Sales Revenue 50,000 
D) Cash 50,000 Prepaid Sales Revenue 50,000

Question 20

Which of the following is not classified as a current liability account?

Accepted Answer

A) accounts payable 
B) note payable, due in 2 years 
C) salaries and wages payable 
D) income taxes payable 
A) accounts payable 
B) note payable, due in 2 years 
C) salaries and wages payable 
D) income taxes payable

The proceeds from advance ticket sales for a concert to be held next month should be recorded as a current liability.

A fast food restaurant sells gift cards which may be redeemed at any time; however, they expire in one year. At the time these gift cards are sold, the account to be credited is called ____________________.

A(n)____________________ arises when a business purchases goods or services on credit.

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase

A company pays wages of $12,500 at the end of each 5-day work week.

What is the impact on the accounting equation of recording the accrual of interest expense?

A company has cash of $800, current liabilities of $500, and long-term liabilities of $600. If the cash ratio is 2.5, then marketable securities must be

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 -Federal unemployment taxes

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If current liabilities are $14,350, then the quick ratio will be

GT Company has $200 in cash, $500 in accounts receivable, and $700 in inventory. The company also has $200 in accounts payable and $200 in unearned sales revenue. What is the company's quick ratio?

A company is required to estimate a liability for repairs for products sold with a warranty. In the year following the sale, the firm's accountants find that the estimated amount for repairs has been overstated. The correct accounting procedure in the year following the sale is to

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. When the company records this transaction, what is the impact on the accounting equation?

____________________ are commitments that represent probable future sacrifices of economic benefits.

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. Which of the following is the correct journal entry to record the sale of the gift cards?

Which of the following is not classified as a current liability account?

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

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Exam 8: Current and Contingent Liabilities

The proceeds from advance ticket sales for a concert to be held next month should be recorded as a current liability.

A fast food restaurant sells gift cards which may be redeemed at any time; however, they expire in one year. At the time these gift cards are sold, the account to be credited is called ____________________.

A(n)____________________ arises when a business purchases goods or services on credit.

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase

A company pays wages of $12,500 at the end of each 5-day work week.

What is the impact on the accounting equation of recording the accrual of interest expense?

A company has cash of $800, current liabilities of $500, and long-term liabilities of $600. If the cash ratio is 2.5, then marketable securities must be

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 -Federal unemployment taxes

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If current liabilities are $14,350, then the quick ratio will be

GT Company has $200 in cash, $500 in accounts receivable, and $700 in inventory. The company also has $200 in accounts payable and $200 in unearned sales revenue. What is the company's quick ratio?

A company is required to estimate a liability for repairs for products sold with a warranty. In the year following the sale, the firm's accountants find that the estimated amount for repairs has been overstated. The correct accounting procedure in the year following the sale is to

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. When the company records this transaction, what is the impact on the accounting equation?

____________________ are commitments that represent probable future sacrifices of economic benefits.

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. Which of the following is the correct journal entry to record the sale of the gift cards?

Which of the following is not classified as a current liability account?

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