Exam 10: Liabilities

When a company has a fully-funded pension plan:

A discount on bonds payable is best described as:

The entry to record the issuance of bonds payable on April 30, Year 2, includes:

Bonds, with the same face value, issued at a premium will:

Effects of transactions upon financial measurements Five events relating to liabilities are described below: (a) Recorded a bi-weekly payroll, including the issuance of paychecks to employees. Amounts withheld from employees' pay and payroll taxes will be forwarded to appropriate agencies in the near future. (Ignore postretirement costs.) (b) Made a monthly payment on a 12-month installment note payable, including interest and a partial repayment of the principal amount. (c) Shortly before the maturity date of a six-month bank loan, made arrangements with the bank to refinance the loan on a long-term basis. (d) Made an adjusting entry to record accrued interest payable on a 2-year bank loan (interest is paid monthly.) (e) Made a year-end adjusting entry to amortize a portion of the discount on long-term bonds payable. Indicate the immediate effects of each transaction or adjusting entry upon the financial measurements in the five column headings listed below. Use the code letters, I for increase, D for decrease, and NE for no effect.

The future value will always be less than the present value.

In preparing an amortization table, it is necessary to include:

What will be the effect on Apex's debt ratio if Apex's owner invests an additional $2 million to finance its expansion?

Payroll-related expenses Shown below is a summary of the annual payroll data of Revere Ironworks:

Which of the following does not affect the market price of an outstanding bond issue?

Loss contingencies stem from past events.

Loss contingencies Ocean to Coast Airlines could, at any time, incur a large loss if one of its airplanes were to crash. Is this an example of a loss contingency which should be disclosed in the company's financial statements? Explain.

Identify those trends that are unfavorable from the viewpoint of a bondholder (More than one answer may be correct.)

Which of the following is the largest payroll-related expense incurred by Girard?

Amounts paid during the year to retirees for pension and other postretirement benefits total:

With respect to this bond issue, Cricket Corporation's balance sheet at December 31, Year 1, will include:

Which of the following payroll costs are shared equally by the employer and the employee?

A liability that is known to exist but the precise dollar amount is not known is called a possible liability.

The entry made by Trego Company to record issuance of the bonds payable at December 31, 2011, includes:

At the end of 2010 it is discovered that the accountant for Gower Company failed to record $60,000 of interest payable which had accrued since the last interest payment date. The current ratio, quick ratio, and debt ratio, as well as the financial statements, had already been computed using the erroneous data. Correction of the accounting records will have which of the following effects?