Exam 9: Current Liabilities and Fair Value Accounting

The higher the interest rate,the lower the future value factor.

Prepare journal entries without explanations for the following transactions involving notes payable for Gomez Company,whose fiscal year ends June 30.

The days' payable is the number of times,on average,that accounts payable are paid in an accounting period.

To determine the payables turnover,one first calculates the days' payable.

Which of the following statements is true regarding the time value of money?

Use this information to answer the following question. The transactions below pertain to Bolivar Company,whose fiscal year ends September 30. The September 30 adjusting entry,rounded to the nearest dollar,to accrue the interest expense on the note payable is:

Liabilities generally arise from future transactions.

The cost approach to the measurement of fair value is based on the amount that currently would be required to replace an asset with the same or a comparable asset.

The annual interest earned on an amount deposited into a bank account will increase each year when simple interest is used.

A liability is recognized when

During July,Audio City sold 200 radios for $50 each.Each radio had cost Audio City $30 to purchase and carried a two-year warranty.If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July,the entry to record the Product Warranty Expense is:

Carroll Company has current assets of $230,000 and current liabilities of $150,000 of which accounts payable are $130,000.Arnold's cost of goods sold is $840,000,its merchandise inventory increased by $40,000,and accounts payable were $90,000 the prior year.Calculate Ronald's working capital,current ratio,payables turnover,and days' payable.

Which of the following most likely is an example of an accrued liability?

A company enters into a contract to purchase a certain quantity of goods from another company during the following month.At this point,would a liability exist? Explain why or why not.

A contingent liability always becomes a true liability.

The market approach to the measurement of fair value converts future cash flows to a single present value.

Match each definition with the correct term below. -Estimated liabilities

Packett Company allows each employee two weeks' paid vacation after the employee has worked at the company for one year.On the basis of past experience,management estimates that 80 percent of employees will qualify for vacation pay this year.Assume that the March payroll is $300,000.Compute the vacation pay expense for the month assuming 50 working weeks a year.Show your computation.

Total payroll for a given week is $24,000.If 70 percent of the company's employees typically qualify to receive two weeks' paid vacation per year,assuming 50 working weeks,the entry to record the estimated liability for vacation pay for the week is:

Property Taxes Expense is recorded only in the month it is paid.