Question 1

According to FASB,when should a contingent liability be disclosed?

Accepted Answer

A) If it is reasonably possible you will lose the lawsuit. 
B) Only if the amount can be estimated and the loss is remote. 
C) If it is probable that the loss will occur,and the amount of the loss can be reasonably estimated. 
D) A contingent liability should never be disclosed. 
A) If it is reasonably possible you will lose the lawsuit. 
B) Only if the amount can be estimated and the loss is remote. 
C) If it is probable that the loss will occur,and the amount of the loss can be reasonably estimated. 
D) A contingent liability should never be disclosed. A

Question 2

The accrual method of accounting requires that expenses be recognized as they are incurred and matched against revenues earned in the same period or in the next period.

Accepted Answer

A) True 
 B)False  False

Question 3

Current liabilities are usually associated with various day-to-day operating activities.

Accepted Answer

A) True 
 B)False  True

Question 4

Illinois Bank lends Lisle Furniture Company $90,000 on December 1.Lisle Furniture Company signs a $90,000,10%,4-month note.The total cash paid at maturity of the note is: (Round your final answer to the nearest dollar. )

Accepted Answer

A) $90,000. 
B) $93,000. 
C) $94,500. 
D) $99,000. 
A) $90,000. 
B) $93,000. 
C) $94,500. 
D) $99,000.

Question 5

For a merchandising company,cost of goods sold is generally the largest expense.

Accepted Answer

A) True 
 B)False

Question 6

To record the accrued interest on a note payable at the end of the accounting period,a journal entry should be written to debit:

Accepted Answer

A) Cash. 
B) Interest Payable. 
C) Notes Payable. 
D) Interest Expense. 
A) Cash. 
B) Interest Payable. 
C) Notes Payable. 
D) Interest Expense.

Question 7

Which account is NOT an example of an accrued liability?

Accepted Answer

A) sales tax payable 
B) wages payable 
C) interest payable 
D) accounts payable 
A) sales tax payable 
B) wages payable 
C) interest payable 
D) accounts payable

Question 8

If Cost of Goods Sold is $300,000,beginning inventory is $29,000,and ending inventory is $30,000,then the purchases from suppliers (assume all on account)would be:

Accepted Answer

A) $359,000. 
B) $299,000. 
C) $301,000. 
D) $59,000. 
A) $359,000. 
B) $299,000. 
C) $301,000. 
D) $59,000.

Question 9

At the end of the year,a company makes a journal entry to accrue the interest expense on a short-term note payable.As a result of this transaction:

Accepted Answer

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

Question 10

Long-term liabilities are incurred mostly for operating activities.

Accepted Answer

A) True 
 B)False

Question 11

Which number is needed in calculating the accounts payable turnover that is NOT normally reported on the financial statements?

Accepted Answer

A) purchases from suppliers 
B) cost of goods sold 
C) ending inventory 
D) beginning inventory 
A) purchases from suppliers 
B) cost of goods sold 
C) ending inventory 
D) beginning inventory

Question 12

Kathy's Corner Store has total cash sales for the month of $40,000 excluding sales taxes.If the sales tax rate is 5%,which journal entry is needed? (Ignore Cost of Goods Sold. )

Accepted Answer

A) debit Cash $42,000,credit Sales Revenue $42,000 
B) debit Cash $40,000 and credit Sales Revenue $40,000 
C) debit Cash $38,000,debit Sales Tax Receivable for $2,000 and credit Sales Revenue for $40,000 
D) debit Cash $42,000,credit Sales Revenue $40,000 and credit Sales Tax Payable $2,000 
A) debit Cash $42,000,credit Sales Revenue $42,000 
B) debit Cash $40,000 and credit Sales Revenue $40,000 
C) debit Cash $38,000,debit Sales Tax Receivable for $2,000 and credit Sales Revenue for $40,000 
D) debit Cash $42,000,credit Sales Revenue $40,000 and credit Sales Tax Payable $2,000

Question 13

Long-term notes payable are usually used to buy items such as:

Accepted Answer

A) building. 
B) equipment. 
C) equity investments. 
D) all of the above. 
A) building. 
B) equipment. 
C) equity investments. 
D) all of the above.

Question 14

Failure to record an accrued liability for wages earned by employees causes a company to:

Accepted Answer

A) understate net income. 
B) overstate assets. 
C) overstate liabilities. 
D) overstate stockholders' equity. 
A) understate net income. 
B) overstate assets. 
C) overstate liabilities. 
D) overstate stockholders' equity.

Question 15

If the accounts payable turnover is 5.4,what is the days' payable outstanding? (Round your answer to the nearest day. )

Accepted Answer

A) 58 days 
B) 18 days 
C) 68 days 
D) 55 days 
A) 58 days 
B) 18 days 
C) 68 days 
D) 55 days

Question 16

Which account would be reported on the income statement?

Accepted Answer

A) Wages Payable 
B) Interest Payable 
C) Notes Payable 
D) Interest Expense 
A) Wages Payable 
B) Interest Payable 
C) Notes Payable 
D) Interest Expense

Question 17

Michigan Bank lends Detroit Furniture Company $110,000 on December 1.Detroit Furniture Company signs a $110,000,9%,4-month note.The total cash paid for interest (only)at maturity of the note is: (Round your final answer to the nearest dollar. )

Accepted Answer

A) $1,100. 
B) $3,300. 
C) $6,600. 
D) $9,900. 
A) $1,100. 
B) $3,300. 
C) $6,600. 
D) $9,900.

Question 18

All contingent liabilities should be reported as liabilities on the financial statements,even those that are unlikely to occur.

Accepted Answer

A) True 
 B)False

Question 19

Under IFRS,if it is greater than ________ probability that an obligation is going to arise,and the amount can be estimated,then a "provision" should be recorded by making a journal entry.

Accepted Answer

A) 25% 
B) 33% 
C) 50% 
D) 67% 
A) 25% 
B) 33% 
C) 50% 
D) 67%

Question 20

For a service organization,compensation is not generally a major operating expense.

Accepted Answer

A) True 
 B)False

According to FASB,when should a contingent liability be disclosed?

The accrual method of accounting requires that expenses be recognized as they are incurred and matched against revenues earned in the same period or in the next period.

Current liabilities are usually associated with various day-to-day operating activities.

Illinois Bank lends Lisle Furniture Company $90,000 on December 1.Lisle Furniture Company signs a $90,000,10%,4-month note.The total cash paid at maturity of the note is: (Round your final answer to the nearest dollar. )

For a merchandising company,cost of goods sold is generally the largest expense.

To record the accrued interest on a note payable at the end of the accounting period,a journal entry should be written to debit:

Which account is NOT an example of an accrued liability?

If Cost of Goods Sold is $300,000,beginning inventory is $29,000,and ending inventory is $30,000,then the purchases from suppliers (assume all on account)would be:

At the end of the year,a company makes a journal entry to accrue the interest expense on a short-term note payable.As a result of this transaction:

Long-term liabilities are incurred mostly for operating activities.

Which number is needed in calculating the accounts payable turnover that is NOT normally reported on the financial statements?

Kathy's Corner Store has total cash sales for the month of $40,000 excluding sales taxes.If the sales tax rate is 5%,which journal entry is needed? (Ignore Cost of Goods Sold. )

Long-term notes payable are usually used to buy items such as:

Failure to record an accrued liability for wages earned by employees causes a company to:

If the accounts payable turnover is 5.4,what is the days' payable outstanding? (Round your answer to the nearest day. )

Which account would be reported on the income statement?

Michigan Bank lends Detroit Furniture Company $110,000 on December 1.Detroit Furniture Company signs a $110,000,9%,4-month note.The total cash paid for interest (only)at maturity of the note is: (Round your final answer to the nearest dollar. )

All contingent liabilities should be reported as liabilities on the financial statements,even those that are unlikely to occur.

Under IFRS,if it is greater than ________ probability that an obligation is going to arise,and the amount can be estimated,then a "provision" should be recorded by making a journal entry.

For a service organization,compensation is not generally a major operating expense.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

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

According to FASB,when should a contingent liability be disclosed?

The accrual method of accounting requires that expenses be recognized as they are incurred and matched against revenues earned in the same period or in the next period.

Current liabilities are usually associated with various day-to-day operating activities.

Illinois Bank lends Lisle Furniture Company $90,000 on December 1.Lisle Furniture Company signs a $90,000,10%,4-month note.The total cash paid at maturity of the note is: (Round your final answer to the nearest dollar. )

For a merchandising company,cost of goods sold is generally the largest expense.

To record the accrued interest on a note payable at the end of the accounting period,a journal entry should be written to debit:

Which account is NOT an example of an accrued liability?

If Cost of Goods Sold is $300,000,beginning inventory is $29,000,and ending inventory is $30,000,then the purchases from suppliers (assume all on account)would be:

At the end of the year,a company makes a journal entry to accrue the interest expense on a short-term note payable.As a result of this transaction:

Long-term liabilities are incurred mostly for operating activities.

Which number is needed in calculating the accounts payable turnover that is NOT normally reported on the financial statements?

Kathy's Corner Store has total cash sales for the month of $40,000 excluding sales taxes.If the sales tax rate is 5%,which journal entry is needed? (Ignore Cost of Goods Sold. )

Long-term notes payable are usually used to buy items such as:

Failure to record an accrued liability for wages earned by employees causes a company to:

If the accounts payable turnover is 5.4,what is the days' payable outstanding? (Round your answer to the nearest day. )

Which account would be reported on the income statement?

Michigan Bank lends Detroit Furniture Company $110,000 on December 1.Detroit Furniture Company signs a $110,000,9%,4-month note.The total cash paid for interest (only)at maturity of the note is: (Round your final answer to the nearest dollar. )

All contingent liabilities should be reported as liabilities on the financial statements,even those that are unlikely to occur.

Under IFRS,if it is greater than ________ probability that an obligation is going to arise,and the amount can be estimated,then a "provision" should be recorded by making a journal entry.

For a service organization,compensation is not generally a major operating expense.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters