Question 1

Contingent gains are generally not recognized in the financial statements due to conservatism.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be considered when evaluating whether to record a contingent loss for pending litigation?

Accepted Answer

A) the type of litigation involved. 
B) the ability to make a reasonable estimate of the amount of the loss 
C) time period in which the underlying cause of action occurred 
D) the probability of an unfavorable outcome 
A) the type of litigation involved. 
B) the ability to make a reasonable estimate of the amount of the loss 
C) time period in which the underlying cause of action occurred 
D) the probability of an unfavorable outcome

Question 3

What are compensated absences? How does a company account for them?

Accepted Answer

Compensated absences are employer-paid t

Question 4

An assurance-type warranty is also referred to as an extended warranty.

Accepted Answer

A) True 
 B)False

Question 5

The income tax payable that a company reports on its balance sheet represents the amount that is owed to the governmental units.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the proper way to report a probable contingent asset?

Accepted Answer

A) as a disclosure only 
B) as a deferred revenue 
C) as an accrued revenue 
D) as an increase to receivables 
A) as a disclosure only 
B) as a deferred revenue 
C) as an accrued revenue 
D) as an increase to receivables

Question 7

Pegasus Corp.signed a three-month,zero-interest-bearing $253,315 note on November 1,2016 for the purchase of $250,000 of inventory.If Pegasus makes adjusting entries only at the end of the year,the adjusting entry made at December 31,2016 will include a ________.

Accepted Answer

A) debit to Note Payable for $2,210 
B) debit to Interest Expense for $2,210 
C) credit to Note Payable for $2,210 
D) credit to Interest Expense for $2,210 
A) debit to Note Payable for $2,210 
B) debit to Interest Expense for $2,210 
C) credit to Note Payable for $2,210 
D) credit to Interest Expense for $2,210

Question 8

The deposit liability account is debited when it is determined that deposits will not be returned.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not an operating liability?

Accepted Answer

A) bonds payable 
B) unearned revenue 
C) customer deposits 
D) compensated absences 
A) bonds payable 
B) unearned revenue 
C) customer deposits 
D) compensated absences

Question 10

Operating liabilities are short-term obligations.

Accepted Answer

A) True 
 B)False

Question 11

Onopea Inc.considered two contingencies at the end of 2016: ** a probable loss in the range of $300,000 to $500,000
** a reasonably possible loss of $150,000
Under IFRS,what is the balance for contingent liabilities at the end of 2016?

Accepted Answer

A) $300,000 
B) $400,000 
C) $450,000 
D) $550,000 
A) $300,000 
B) $400,000 
C) $450,000 
D) $550,000

Question 12

The sales tax liability account is debited when the seller collects sales taxes from customers.

Accepted Answer

A) True 
 B)False

Question 13

Mingle,Inc.,a manufacturer of cleaning products,is preparing annual financial statements at December 31,2016.Because of a recently proven health hazard in one of its cleaning products,the U.S.government has clearly indicated its intention of having Mingle recall all bottles of that product sold in the last six months.The management of Mingle estimates that this recall would cost $880,000.What accounting recognition,if any,should be accorded this situation?

Accepted Answer

A) expense and equity restriction of $880,000 
B) expense and liability of $880,000 
C) note disclosure only 
D) no recognition 
A) expense and equity restriction of $880,000 
B) expense and liability of $880,000 
C) note disclosure only 
D) no recognition

Question 14

Kool's Stores made cash sales during the month of May of $79,500.The sales are subject to a 6% sales tax that was also collected.Which of the following would be included in the summary journal entry to reflect the May sales transactions?

Accepted Answer

A) debit Cash for $79,500 
B) credit Sales Tax Payable for $4,500 
C) credit Sales for $75,000 
D) credit Sales Tax Payable for $4,770 
A) debit Cash for $79,500 
B) credit Sales Tax Payable for $4,500 
C) credit Sales for $75,000 
D) credit Sales Tax Payable for $4,770

Question 15

The amount of revenue recognized from the sale of gift cards during the period is equal to gift card redemptions during the period minus estimated breakage.

Accepted Answer

A) True 
 B)False

Question 16

A promotional item offered to buyers of specific products is called ________.

Accepted Answer

A) a premium 
B) an accretion 
C) an assurance-type warranty 
D) a service-type warranty 
A) a premium 
B) an accretion 
C) an assurance-type warranty 
D) a service-type warranty

Question 17

Lifeline Biofuels built an oil rig at a cost of $4.5 million.The company estimates the oil rig will have a useful life of 20 years (with no salvage value),after which Federal regulations require that the oil rig must be dismantled and the land area restored.The present value of these asset retirement costs is $1.4 million based on the 6% after-tax discount rate.
a.Prepare the journal entry prepared at the completion of construction to value the oil rig.
b.Prepare the journal entry to record the annual increase in the carrying value of the liability.

Accepted Answer

The answer of Lifeline Biofuels built an oil rig at...

Question 18

ShoSho Manufacturing.is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant.ShoSho's lawyer states that it is probable that ShoSho will lose the suit and be found liable for a judgment costing ShoSho anywhere from $1,200,000 to $4,400,000.However,the lawyer states that the most probable cost is $3,300,000.As a result of the above facts,what accounting recognition,if any,should be accorded this situation under IFRS?

Accepted Answer

A) ShoSho should accrue a loss contingency of $3,300,000 and disclose an additional contingency of up to $1,100,000. 
B) ShoSho should accrue a loss contingency of $1,200,000 and disclose an additional contingency of up to $3,200,000. 
C) ShoSho should not accrue a loss contingency but disclose a contingency of up to $3,200,000. 
D) ShoSho should not accrue a loss contingency or disclose any contingency. 
A) ShoSho should accrue a loss contingency of $3,300,000 and disclose an additional contingency of up to $1,100,000. 
B) ShoSho should accrue a loss contingency of $1,200,000 and disclose an additional contingency of up to $3,200,000. 
C) ShoSho should not accrue a loss contingency but disclose a contingency of up to $3,200,000. 
D) ShoSho should not accrue a loss contingency or disclose any contingency.

Question 19

Under IFRS,estimated costs of asset retirement obligations are discounted using an after-tax interest rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following terms refers to gift card sales that are never redeemed?

Accepted Answer

A) spoilage 
B) breakage 
C) roughage 
D) liftage 
A) spoilage 
B) breakage 
C) roughage 
D) liftage

Contingent gains are generally not recognized in the financial statements due to conservatism.

Which of the following would not be considered when evaluating whether to record a contingent loss for pending litigation?

What are compensated absences? How does a company account for them?

An assurance-type warranty is also referred to as an extended warranty.

The income tax payable that a company reports on its balance sheet represents the amount that is owed to the governmental units.

Which of the following is the proper way to report a probable contingent asset?

Pegasus Corp.signed a three-month,zero-interest-bearing $253,315 note on November 1,2016 for the purchase of $250,000 of inventory.If Pegasus makes adjusting entries only at the end of the year,the adjusting entry made at December 31,2016 will include a ________.

The deposit liability account is debited when it is determined that deposits will not be returned.

Which of the following is not an operating liability?

Operating liabilities are short-term obligations.

Onopea Inc.considered two contingencies at the end of 2016: a probable loss in the range of $300,000 to $500,000 a reasonably possible loss of $150,000 Under IFRS,what is the balance for contingent liabilities at the end of 2016?

The sales tax liability account is debited when the seller collects sales taxes from customers.

Kool's Stores made cash sales during the month of May of $79,500.The sales are subject to a 6% sales tax that was also collected.Which of the following would be included in the summary journal entry to reflect the May sales transactions?

The amount of revenue recognized from the sale of gift cards during the period is equal to gift card redemptions during the period minus estimated breakage.

A promotional item offered to buyers of specific products is called ________.

Under IFRS,estimated costs of asset retirement obligations are discounted using an after-tax interest rate.

Which of the following terms refers to gift card sales that are never redeemed?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 14: Operating Liabilities and Contingencies

Contingent gains are generally not recognized in the financial statements due to conservatism.

Which of the following would not be considered when evaluating whether to record a contingent loss for pending litigation?

What are compensated absences? How does a company account for them?

An assurance-type warranty is also referred to as an extended warranty.

The income tax payable that a company reports on its balance sheet represents the amount that is owed to the governmental units.

Which of the following is the proper way to report a probable contingent asset?

Pegasus Corp.signed a three-month,zero-interest-bearing $253,315 note on November 1,2016 for the purchase of $250,000 of inventory.If Pegasus makes adjusting entries only at the end of the year,the adjusting entry made at December 31,2016 will include a ________.

The deposit liability account is debited when it is determined that deposits will not be returned.

Which of the following is not an operating liability?

Operating liabilities are short-term obligations.

Onopea Inc.considered two contingencies at the end of 2016: ** a probable loss in the range of $300,000 to $500,000 ** a reasonably possible loss of $150,000 Under IFRS,what is the balance for contingent liabilities at the end of 2016?

The sales tax liability account is debited when the seller collects sales taxes from customers.

Kool's Stores made cash sales during the month of May of $79,500.The sales are subject to a 6% sales tax that was also collected.Which of the following would be included in the summary journal entry to reflect the May sales transactions?

The amount of revenue recognized from the sale of gift cards during the period is equal to gift card redemptions during the period minus estimated breakage.

A promotional item offered to buyers of specific products is called ________.

Under IFRS,estimated costs of asset retirement obligations are discounted using an after-tax interest rate.

Which of the following terms refers to gift card sales that are never redeemed?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Onopea Inc.considered two contingencies at the end of 2016: a probable loss in the range of $300,000 to $500,000 a reasonably possible loss of $150,000 Under IFRS,what is the balance for contingent liabilities at the end of 2016?