Question 1

Chenowith Company recorded accrued vacation pay.

Accepted Answer

(N) (I) (D) (N) (I) (D) (N)
Explanation:...

Question 2

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?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) B) and C)
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  The outcome is reasonably possible.
B)  The outcome is probable.
C)  The amount can be reasonably estimated.
D)  Both the outcome is probable and the amount can be reasonably estimateD.A contingent liability should be recorded in the financial statements as a liability if the outcome is considered probable and the amount owed can be reasonably estimated. If it is considered only reasonably possible, it is only disclosed in the footnotes.E) A) and D)
F) A) and C)

Question 5

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

Accepted Answer

(D) (D) (N) (N) (N) (N) (D)
Explanation:...

Question 6

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

Accepted Answer

(N) (I) (D) (N) (I) (D) (N)
Explanation:...

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  Warranties payable, discounts on notes payable, accounts payable.
B)  Accounts payable, notes payable, allowance for doubtful accounts.
C)  Notes payable, discounts on notes payable, credit card receivables.
D)  Accounts payable, allowance for doubtful accounts, warranties payable.E) None of the above
F) A) and D)

Question 10

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

Accepted Answer

A)  Bonds Payable.
B)  Wages Payable.
C)  Accounts Payable.
D)  Interest Payable.E) C) and D)
F) All of the above

Question 11

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?

Accepted Answer

Issuing a note payable increases cash fl...

Question 12

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

Accepted Answer

A)  have no effect on the current ratio.
B)  cause the current ratio to decrease.
C)  cause the current ratio to increase.
D)  potentially affect the current ratio, but the direction of the change cannot be determined without more information.E) All of the above
F) B) and D)

Question 13

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

Accepted Answer

A)  $480.
B)  $200.
C)  $6,000.
D)  zero.E) A) and B)
F) B) and C)

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  2.5 to 1
B)  1.6 to 1
C)  1.76 to 1
D)  .66 to 1E) A) and B)
F) A) and C)

Question 16

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

Accepted Answer

A)  It dictates that interest expense be accrued at the end of the accounting period.
B)  It dictates that notes payable be reported at their face value.
C)  It dictates that notes payable be reported at their net realizable value.
D)  It dictates that interest expense be paid when the note matures.E) C) and D)
F) A) and C)

Question 17

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

Accepted Answer

A)  $1,200.
B)  $400.
C)  $800.
D)  $2,400.E) C) and D)
F) All of the above

Question 18

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

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) C) and D)
F) B) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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:

Accepted Answer

A)  Disclose the lawsuit in the footnotes to the financial statements.
B)  Recognize a $5 million liability on its balance sheet for the contingency.
C)  Ignore the lawsuit in its financial statements.
D)  Settle with the customer immediately for $5 million to avoid harmful publicity.E) B) and C)
F) A) and D)

Exam 9: Accounting for Current Liabilities and Payroll

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.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

Chenowith Company recorded accrued vacation pay.

Correct Answer
verified
(N) (I) (D) (N) (I) (D) (N)
Explanation:...
View Answer

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

Correct Answer
verified

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?

Correct Answer
verified
Issuing a note payable increases cash fl...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
(D) (D) (N) (N) (N) (N) (D)
Explanation:...
View Answer

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.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
(N) (I) (D) (N) (I) (D) (N)
Explanation:...
View Answer

Exam 9: Accounting for Current Liabilities and Payroll

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Chenowith Company recorded accrued vacation pay.

Correct Answerverified(N) (I) (D) (N) (I) (D) (N)Explanation:...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedIssuing a note payable increases cash fl...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified(D) (D) (N) (N) (N) (N) (D)Explanation:...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified(N) (I) (D) (N) (I) (D) (N)Explanation:...View AnswerShow Answer

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(N) (I) (D) (N) (I) (D) (N)
Explanation:...
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Issuing a note payable increases cash fl...
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(D) (D) (N) (N) (N) (N) (D)
Explanation:...
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(N) (I) (D) (N) (I) (D) (N)
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