Question 1

During one pay period,your company distributes $130,500 to employees as net pay.The income tax withholdings were $19,000 and the Canada Pension Plan withholdings were $5,000.The total wages/salary expense to the company,which includes CPP matching,during this period was:

Accepted Answer

A)  $149,500.
B)  $130,500.
C)  $154,500.
D)  $159,500.E) B) and D)
F) B) and C)

Question 2

What adjusting entry did Backyard make on June 30 before preparing its financial statements?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) None of the above
F) A) and D)

Question 3

A company pays $18,000 in interest on notes,consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously accrued on the books.The journal entry for the interest payment should:

Accepted Answer

A)  debit Interest Expense for $18,000 and credit Cash for $18,000.
B)  debit Cash for $18,000 and credit Interest Payable for $18,000.
C)  debit Interest Expense for $6,000,debit Interest Payable $12,000 and credit Cash for $18,000.
D)  debit Interest Payable for $12,000,debit Accrued Interest $6,000 and credit Cash for $18,000.E) A) and D)
F) B) and D)

Question 4

Bonds with a stated interest rate of 9% and face value totalling $600,000 were issued at 104 on January 1,2008,implying an annual market interest rate of 8%.Assuming that interest is computed annually,at what carrying value should the total liability for these bonds be reported two years later on December 31,2009?

Accepted Answer

None...

Question 5

A 1-year,$30,000,10 percent note is signed on May 1.If the note is repaid on October 1 of the same year,how much interest expense is incurred?

Accepted Answer

A)  $2,000
B)  $625
C)  $1,250
D)  $600E) C) and D)
F) A) and C)

Question 6

The face value of a bond is what it is currently worth in the market.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Question 7

Liquidity refers to a company's ability to pay current obligations or debts.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 8

Where a bond is sold at a discount,interest expense recorded using the effective interest method is less than the interest paid on that bond.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a standard of recognition of contingent liabilities required by IFRS:

Accepted Answer

A)  recognize the liability if the occurrence of the future event is likely meaning it is highly probable.
B)  recognize the liability if the occurrence of the future event is more likely than not meaning its probable.
C)  does not require that it be measurable.
D)  Recognize the liability if the occurrence of the future event is certainE) A) and D)
F) A) and C)

Question 10

Your company sells $50,000 of bonds for an issue price of $52,000.Which of the following statements is correct?

Accepted Answer

A)  The bond sold at a price of 52,implying a premium of $2,000.
B)  The bond sold at a price of 104,implying a discount of $2,000.
C)  The bond sold at a price of 52,implying a discount of $2,000.
D)  The bond sold at a price of 104,implying a premium of $2,000.E) C) and D)
F) None of the above

Question 11

During a two week pay period,your company's employees earned gross wages and salaries of $67,500.The employees have income tax withholdings of $7,800 and the company owes a total of $10,400 in Canada Pension Plan payments (includes both the company and employee portions).Calculate the net pay that was paid to the employees and wages and salary expense for the company.Prepare the journal entry for this transaction.

Accepted Answer

Net Pay = Gross Pay (wages and salaries ...

Question 12

Which of the following statements best describes a contingent liability? A contingent liability is a:

Accepted Answer

A)  liability,the amount of which is known and which definitely must be paid.
B)  potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur.
C)  liability that will only be incurred if a particular future event takes place.
D)  potential liability that will be incurred if a natural disaster happens.E) C) and D)
F) A) and D)

Question 13

Encana Corp.is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15,2012.Interest rates fall in the economy so that similar financial investments pay 5%.Encana will:

Accepted Answer

A)  not be able to issue the bonds from the market because no one will buy them.
B)  receive a higher issue price as buyers compete for the bonds.
C)  have to accept a lower issue price to attract buyers.
D)  have to reprint the bond certificates to change the stated interest rate to 5%.E) B) and C)
F) A) and D)

Question 14

A company has current assets of $5 million and net income of $10 million.Current liabilities total $2.5 million,interest expense is $2 million,and income tax expense is $3 million.The times interest earned ratio for this company is approximately:

Accepted Answer

A)  0.5.
B)  7.5.
C)  0.3.
D)  2.0.E) A) and B)
F) A) and C)

Question 15

Brief Respite,Inc.,sold underwear made from a fabric that gave many of its customers a serious rash.The customers are suing the company in a class action suit and Brief Respite's attorneys think it is probable that the case will cost the company $2 million,although the verdict is not yet in.The company should:

Accepted Answer

A)  not include this information in its annual report.
B)  record a liability and a gain for $2 million.
C)  only explain the situation in the notes to the financial statements.
D)  record a liability and a loss for $2 million.E) C) and D)
F) B) and C)

Question 16

You are considering buying a bond from a company that has a Quick ratio of 0.45.This means that:

Accepted Answer

A)  the company has 45% of its total assets in the current category.
B)  the company has 45 cents of total assets for every dollar of total liabilities.
C)  the company has 45 cents of liquid assets for every dollar of current liabilities.
D)  shareholders currently own 45% of the company's assets.E) C) and D)
F) A) and B)

Question 17

Your company sells $50,000 of bonds for an issue price of $48,000.Which of the following statements is correct?

Accepted Answer

A)  The bonds sold at a price of 96,implying a discount of $4,000.
B)  The bonds sold at a price of 48,implying a premium of $2,000.
C)  The bonds sold at a price of 48,implying a premium of $4,000.
D)  The bonds sold at a price of 96,implying a discount of $2,000.E) None of the above
F) B) and D)

Question 18

When the effective interest method of amortization is used,what happens to the amount of discount or premium amortized as a bond moves toward maturity?

Accepted Answer

A)  The amount of discount or premium amortized each period decreases.
B)  The amount of discount or premium amortized each period increases for bonds sold at a discount but decreases for bonds sold at a premium.
C)  The amount of discount or premium amortized each period increases.
D)  The amount of discount or premium amortized each period decreases for bonds sold a discount but increases for bonds sold at a premium.E) All of the above
F) A) and B)

Question 19

A company issued $400,000,10-year,10 percent bonds at 104.What is the issue price of these bonds?

Accepted Answer

A)  $400,000
B)  $386,000
C)  $416,000
D)  $440,000E) B) and C)
F) A) and D)

Question 20

Based on the following information calculate the times interest earned of the company.

Accepted Answer

A)  122
B)  129
C)  130
D)  139E) None of the above
F) A) and B)

Exam 10: Liabilities

The face value of a bond is what it is currently worth in the market. BT: Knowledge

Correct Answer
verified

A company has current assets of $5 million and net income of $10 million.Current liabilities total $2.5 million,interest expense is $2 million,and income tax expense is $3 million.The times interest earned ratio for this company is approximately:

Correct Answer
verified

Liquidity refers to a company's ability to pay current obligations or debts. BT: Comprehension

Correct Answer
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A company issued $400,000,10-year,10 percent bonds at 104.What is the issue price of these bonds?

Correct Answer
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Which of the following statements best describes a contingent liability? A contingent liability is a:

Correct Answer
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When the effective interest method of amortization is used,what happens to the amount of discount or premium amortized as a bond moves toward maturity?

Correct Answer
verified

During one pay period,your company distributes $130,500 to employees as net pay.The income tax withholdings were $19,000 and the Canada Pension Plan withholdings were $5,000.The total wages/salary expense to the company,which includes CPP matching,during this period was:

Correct Answer
verified

Which of the following is a standard of recognition of contingent liabilities required by IFRS:

Correct Answer
verified

Your company sells $50,000 of bonds for an issue price of $52,000.Which of the following statements is correct?

Correct Answer
verified

What adjusting entry did Backyard make on June 30 before preparing its financial statements?

Correct Answer
verified

Where a bond is sold at a discount,interest expense recorded using the effective interest method is less than the interest paid on that bond. BT: Comprehension

Correct Answer
verified

Correct Answer
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None...
View Answer

A 1-year,$30,000,10 percent note is signed on May 1.If the note is repaid on October 1 of the same year,how much interest expense is incurred?

Correct Answer
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Based on the following information calculate the times interest earned of the company.

Correct Answer
verified

Your company sells $50,000 of bonds for an issue price of $48,000.Which of the following statements is correct?

Correct Answer
verified

A company pays $18,000 in interest on notes,consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously accrued on the books.The journal entry for the interest payment should:

Correct Answer
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Correct Answer
verified

You are considering buying a bond from a company that has a Quick ratio of 0.45.This means that:

Correct Answer
verified

Encana Corp.is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15,2012.Interest rates fall in the economy so that similar financial investments pay 5%.Encana will:

Correct Answer
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Correct Answer
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Net Pay = Gross Pay (wages and salaries ...
View Answer

Exam 10: Liabilities

The face value of a bond is what it is currently worth in the market. BT: Knowledge

Correct AnswerverifiedShow Answer

A company has current assets of $5 million and net income of $10 million.Current liabilities total $2.5 million,interest expense is $2 million,and income tax expense is $3 million.The times interest earned ratio for this company is approximately:

Correct AnswerverifiedShow Answer

Liquidity refers to a company's ability to pay current obligations or debts. BT: Comprehension

Correct AnswerverifiedShow Answer

A company issued $400,000,10-year,10 percent bonds at 104.What is the issue price of these bonds?

Correct AnswerverifiedShow Answer

Which of the following statements best describes a contingent liability? A contingent liability is a:

Correct AnswerverifiedShow Answer

When the effective interest method of amortization is used,what happens to the amount of discount or premium amortized as a bond moves toward maturity?

Correct AnswerverifiedShow Answer

During one pay period,your company distributes $130,500 to employees as net pay.The income tax withholdings were $19,000 and the Canada Pension Plan withholdings were $5,000.The total wages/salary expense to the company,which includes CPP matching,during this period was:

Correct AnswerverifiedShow Answer

Which of the following is a standard of recognition of contingent liabilities required by IFRS:

Correct AnswerverifiedShow Answer

Your company sells $50,000 of bonds for an issue price of $52,000.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

What adjusting entry did Backyard make on June 30 before preparing its financial statements?

Correct AnswerverifiedShow Answer

Where a bond is sold at a discount,interest expense recorded using the effective interest method is less than the interest paid on that bond. BT: Comprehension

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

A 1-year,$30,000,10 percent note is signed on May 1.If the note is repaid on October 1 of the same year,how much interest expense is incurred?

Correct AnswerverifiedShow Answer

Based on the following information calculate the times interest earned of the company.

Correct AnswerverifiedShow Answer

Your company sells $50,000 of bonds for an issue price of $48,000.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A company pays $18,000 in interest on notes,consisting of $12,000 interest that accrued during the last accounting period and $6,000 of interest accumulated during this accounting period but not previously accrued on the books.The journal entry for the interest payment should:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

You are considering buying a bond from a company that has a Quick ratio of 0.45.This means that:

Correct AnswerverifiedShow Answer

Encana Corp.is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15,2012.Interest rates fall in the economy so that similar financial investments pay 5%.Encana will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNet Pay = Gross Pay (wages and salaries ...View AnswerShow Answer

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None...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Net Pay = Gross Pay (wages and salaries ...
View Answer