FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Current Liabilities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

On November 1,2012,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2013.The Bagel Factory should report interest payable at December 31,2012,in the amount of:

A) $0.
B) $1,000.
C) $2,000.
D) $3,000.

E) B) and C)
F) A) and B)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following statements regarding liquidity ratios is true?

A) A low current ratio generally indicates the ability to pay current liabilities on a timely basis.
B) A low acid-test ratio generally indicates the ability to pay current liabilities on a timely basis.
C) All current assets are due within one year and therefore have essentially equal liquidity.
D) A high working capital generally indicates the ability to pay current liabilities on a timely basis.

E) A) and C)
F) B) and C)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

Suppose you buy lunch for $8.39 that includes a 5% sales tax.How much did the restaurant charge you for the lunch (excluding any tax) and how much do they owe for sales tax?

The employer records amounts deducted from employee payroll as liabilities until it pays them to the appropriate organizations.

Why is it important to distinguish between current and long-term liabilities?

The sale of gift cards by a company is a direct example of:

On September 1,2012,Daylight Donuts signed a $100,000,9%,six-month note payable with the amount borrowed plus accrued interest due six months later on March 1,2013.Daylight Donuts should report interest payable at December 31,2012,in the amount of:

Interest is stated in terms of a percentage rate to be applied to the face value of the loan.

The acid-test ratio,or quick ratio,is similar to the current ratio but is based on a more conservative measure of current assets available to pay current liabilities.

Given a choice,most companies would prefer to report a liability as current rather than long-term,because doing so may cause the firm to appear less risky.

Long-term obligations such as notes,mortgages,and bonds are reported as long-term liabilities when they become payable within the upcoming year.

A contingent liability is an existing,uncertain situation that might result in a loss.

When a company collects sales tax from a customer,the event is recorded by:

On November 1,Vacation Desinations borrows $1.5 million and issues a six-month,8% note payable.Interest is payable at maturity.Record the issuance of the note and the appropriate adjusting entry for interest expense at December 31,the end of the reporting period.

At the beginning of 2012,Angel Corporation began offering a 1-year warranty on its products.The warranty program was expected to cost Angel 4% of net sales.Net sales made under warranty in 2012 were $180 million.Five percent of the units sold were returned in 2012 and repaired or replaced at a cost of $5.3 million.The amount of warranty expense on Angel's 2012 income statement is:

Define a contingent liability.Provide three common examples.Under what circumstances should a firm report a contingent liability?

During November,Wireless,Inc.makes a $1,600 credit sale.The state sales tax rate is 5% and the local sales tax rate is 1.5%.Record sales revenue and sales tax payable.

Volt Electronics sells equipment that includes a three-year warranty.Repairs under the warranty are performed by an independent service company under a contract with Volt.Based on prior experience,warranty costs are estimated to be $25 per item sold.Volt should recognize these warranty costs:

Additional employee benefits paid for by the employer are often referred to as fringe benefits.

On November 1,2012,New Morning Bakery signed a $200,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2013.New Morning Bakery records the appropriate adjusting entry for the note on December 31,2012.What amount of cash will be needed to pay back the note payable plus any accrued interest on May 1,2013?