Question 1

Under ASPE, the following should NOT be disclosed in notes to the financial statements.

Accepted Answer

A)  If the contingency is unlikely and the chance of occurrence is small. 
B)  If the contingency is likely but the amount of the loss cannot be reasonably estimated. 
C)  If the existence of the contingent liability is not determinable. 
D)  If the contingency is unlikely but it could have a substantial negative effect on the company's financial position.

Question 2

As interest is recorded on an interest-bearing note, the Interest Expense account is

Accepted Answer

A)  increased; the Notes Payable account is increased. 
B)  increased; the Notes Payable account is decreased. 
C)  increased; the Interest Payable account is increased. 
D)  decreased; the Interest Payable account is increased.

Question 3

Algonquin Provincial Bank agrees to lend Grimwood Brick Company $80,000 on January 1. Grimwood Brick Company signs an $80,000, 9-month, 5% note.
-The entry made by Grimwood Brick Company on January 1 to record the proceeds and issue of the note is:

Accepted Answer

The answer of Algonquin Provincial Bank agrees to lend Grimwood...

Question 4

Algonquin Provincial Bank agrees to lend Grimwood Brick Company $80,000 on January 1. Grimwood Brick Company signs an $80,000, 9-month, 5% note.
-What is the adjusting entry required if Grimwood Brick Company prepares financial statements on June 30?

Accepted Answer

The answer of Algonquin Provincial Bank agrees to lend Grimwood...

Question 5

Muffin Company issued a five-year, interest-bearing note payable for $50,000 on January 1, 2014. Each January the company is required to pay $10,000 on the note. How will this note be reported on the December 31, 2015 balance sheet?

Accepted Answer

A)  Long-term debt, $50,000 
B)  Long-term debt, $40,000 
C)  Long-term debt, $30,000; Long-term debt due within one year, $10,000 
D)  Long-term debt of $40,000; Long-term debt due within one year, $10,000

Question 6

When an interest-bearing note matures, the balance in the Notes Payable account is

Accepted Answer

A)  less than the total amount repaid by the borrower. 
B)  the difference between the maturity value of the note and the face value of the note. 
C)  equal to the total amount repaid by the borrower. 
D)  greater than the total amount repaid by the borrower.

Question 7

Under ASPE, only ________________contingent losses are recognized.

Accepted Answer

A)  highly likely 
B)  probable 
C)  more likely than not 
D)  unlikely

Question 8

If a liability is dependent on a future event, it is called a

Accepted Answer

A)  potential loss. 
B)  hypothetical loss. 
C)  probabilistic loss. 
D)  contingent loss.

Question 9

A note payable must be payable within one year.

Accepted Answer

A) True 
 B)False

Question 10

On February 28, 2014, Fidanza Company has the following selected accounts after posting adjusting entries:  Instructions 
a. Prepare the current liability section of Fidanza Company's balance sheet, assuming $25,000 of the mortgage is payable next year. (List liabilities in order of magnitude, with largest first.)
b. Comment on Fidanza's liquidity, assuming total current assets are $400,000.

Accepted Answer

The answer of On February 28, 2014, Fidanza Company has...

Question 11

Use the following information for questions .
On October 1, Jacob's Auto Service borrows $75,000 from Provincial Bank on a $75,000, 3-month, 6% note.
-The entry by Jacob's Auto Service to record payment of the note and accrued interest on January 1 is:

Accepted Answer

The answer of Use the following information for questions .
On...

Question 12

The sales discount for redemptions rewards is recorded as a(n)

Accepted Answer

A)  current asset. 
B)  current liability. 
C)  expense account. 
D)  contra sales account.

Question 13

A determinable liability is one which

Accepted Answer

A)  has uncertainty with the timing of the due date. 
B)  has uncertainty about the amount which is owed. 
C)  has a known payee. 
D)  has an amount which is due within one year.

Question 14

The following are all of the accounts with credit balances from Kupidy Company's adjusted trial balance at December 31, 2014:  Other information:
The mortgage is due in monthly principal payments of $1,000 plus interest.
The note payable is a six-month, 10% note, interest due at maturity.
Instructions
Prepare the current liabilities section of Kupidy's December 31, 2014 balance sheet.

Accepted Answer

The answer of The following are all of the accounts...

Question 15

IFRS is generally regarded as having a higher threshold for recognizing liabilities.

Accepted Answer

A) True 
 B)False

Question 16

Under ASPE, a liability for a contingent loss is recorded if both of the following conditions are met:

Accepted Answer

A)  occurrence is high and amount cannot be estimated. 
B)  amount is reasonably estimated and occurrence is low. 
C)  occurrence is low and amount is determinable. 
D)  occurrence is high and amount can be reasonable estimated.

Question 17

An operating line of credit is a credit which is set up by a major supplier to assist the company with their purchases online.

Accepted Answer

A) True 
 B)False

Question 18

A $15,000, 9-month, 8% note payable requires an interest payment of $900 at maturity if no interest was previously paid.

Accepted Answer

A) True 
 B)False

Exam 10: Current Liabilities

Under ASPE, the following should NOT be disclosed in notes to the financial statements.

As interest is recorded on an interest-bearing note, the Interest Expense account is

Algonquin Provincial Bank agrees to lend Grimwood Brick Company $80,000 on January 1. Grimwood Brick Company signs an $80,000, 9-month, 5% note. -The entry made by Grimwood Brick Company on January 1 to record the proceeds and issue of the note is:

Algonquin Provincial Bank agrees to lend Grimwood Brick Company $80,000 on January 1. Grimwood Brick Company signs an $80,000, 9-month, 5% note. -What is the adjusting entry required if Grimwood Brick Company prepares financial statements on June 30?

Muffin Company issued a five-year, interest-bearing note payable for $50,000 on January 1, 2014. Each January the company is required to pay $10,000 on the note. How will this note be reported on the December 31, 2015 balance sheet?

When an interest-bearing note matures, the balance in the Notes Payable account is

Under ASPE, only ________________contingent losses are recognized.

If a liability is dependent on a future event, it is called a

A note payable must be payable within one year.

Use the following information for questions . On October 1, Jacob's Auto Service borrows $75,000 from Provincial Bank on a $75,000, 3-month, 6% note. -The entry by Jacob's Auto Service to record payment of the note and accrued interest on January 1 is:

The sales discount for redemptions rewards is recorded as a(n)

A determinable liability is one which

IFRS is generally regarded as having a higher threshold for recognizing liabilities.

Under ASPE, a liability for a contingent loss is recorded if both of the following conditions are met:

An operating line of credit is a credit which is set up by a major supplier to assist the company with their purchases online.

A $15,000, 9-month, 8% note payable requires an interest payment of $900 at maturity if no interest was previously paid.