Exam 9: Accounting for Current Liabilities and Payroll

Mighty Burger has been named as a plaintiff in a $5 million lawsuit filed by a customer over the addictive nature of the company's french fries. Mighty Burger's attorneys have advised them that the likelihood of a future obligation from the suit is remote. As a result of the lawsuit, Mighty Burger should:

The following information is taken from the balance sheet of Alberta Company: Alberta Company's current ratio is:

Which of the following reflects the effect of the year-end adjusting entry to record estimated warranty expense?

Which of the following answers correctly shows the effect of the recognition of the warranty obligation at the end of 2013 on the financial statements of Lucky?

A classified balance sheet is necessary for calculating a company's current ratio.

Vincent Company purchased $8,000 of equipment by making a $500 down payment and issuing a note for the remainder. As a result of this event, assets increased by $7,500.

Which of the following accounts appear in the liabilities section of the balance sheet?

How does the going concern assumption affect accounting for notes payable?

On October 1, 2012, Haywood Company borrowed money by issuing a $12,000 face value discount note to its bank. The note had an 8% discount rate and had a term of 1 year. On December 31, 2012, Haywood should accrue interest expense in the amount of $240.

Chenowith Company recognized payroll tax expense for employer portion of FICA tax and federal and state unemployment taxes.

Which of the following items would be least likely to appear in the current liabilities section of a classified balance sheet?

The amount of interest expense appearing on the 2012 income statement would be:

If a company offers a warranty on the products it sells, the company records the warranty expense at the time that service is provided to customers under the terms of the warranty.

Use the information on January 1, 2013 to determine the effect of the following entry on the current ratio of Minerva Company: This transaction will

Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet?

The amount of cash flow from operating activities on the 2013 statement of cash flows would be:

How do the issuance of a note payable, accrual of interest, and repayment of the note's principal and interest affect a company's Statement of Cash Flows?

Chenowith Company recorded accrued vacation pay.

Chenowith Company submitted payment for withheld state and federal employment taxes.

FICA taxes are both recorded as salary expense and as payroll tax expense.