The debt to total assets ratio is computed by dividing
a. current liabilities by total assets.
b. long-term liabilities by total assets.
c. total...
The times interest earned ratio is computed by dividing
The times interest earned ratio is computed by dividing
a. net income by interest expense.
b. income before taxes by interest expense.
c. income before...
Note disclosures for long-term debt generally include all of the following except
Note disclosures for long-term debt generally include all of the following except
a. assets pledged as security.
b. call provisions and conversion...
Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?
Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?
a. The present value of future payments...
Long-term debt that matures within one year and is to be converted into stock should be reported
Long-term debt that matures within one year and is to be converted into stock should be reported
a. as a current liability.
b. in a special section...
When a business enterprise enters into what is referred to as off-balance-sheet financing, the company
When a business enterprise enters into what is referred to as off-balance-sheet financing, the company
a. is attempting to conceal the debt from shareholders...
Which of the following is an example of "off-balance-sheet financing"?
Which of the following is an example of "off-balance-sheet financing"?
1. Non-consolidated subsidiary.
2. Special purpose entity.
3. Operating leases.
a....
Discount on Notes Payable is charged to interest expense
Discount on Notes Payable is charged to interest expense
a. equally over the life of the note.
b. only in the year the note is issued.
c. using the...
When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless
When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless
a. no interest rate is stated.
b....
When a note payable is issued for property, goods, or services, the present value of the note is measured by
When a note payable is issued for property, goods, or services, the present value of the note is measured by
a. the fair value of the property, goods,...
A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes place
A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes...
A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation?
A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title...
"In-substance defeasance" is a term used to refer to an arrangement whereby
"In-substance defeasance" is a term used to refer to an arrangement whereby
a. a company gets another company to cover its payments due on long-term...
The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
a. an adjustment...
An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition
An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the...
Treasury bonds should be shown on the balance sheet as
Treasury bonds should be shown on the balance sheet as
a. an asset.
b. a deduction from bonds payable issued to arrive at net bonds payable and outstanding.
c....
The printing costs and legal fees associated with the issuance of bonds should
The printing costs and legal fees associated with the issuance of bonds should
a. be expensed when incurred.
b. be reported as a deduction from the...
Theoretically, the costs of issuing bonds could be
Theoretically, the costs of issuing bonds could be
a. expensed when incurred.
b. reported as a reduction of the bond liability.
c. debited to a deferred...
When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be
When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will...
If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
a. debit to Interest Payable.
b. credit...
When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will
When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will
a. increase if the bonds were issued...
Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to
Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to
a. the stated (nominal) rate...
If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
a. exceed...
Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that
Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this...
Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. Another step in calculating the issue price of the bonds is to
Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%.Another step in calculating the issue...
Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for
Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%.One step in calculating the issue price...
The rate of interest actually earned by bondholders is called the
The rate of interest actually earned by bondholders is called the
a. stated rate.
b. yield rate.
c. effective rate.
d. effective, yield, or market...
The interest rate written in the terms of the bond indenture is known as the
The interest rate written in the terms of the bond indenture is known as the
a. coupon rate.
b. nominal rate.
c. stated rate.
d. coupon rate, nominal...
If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
a....
Bonds that pay no interest unless the issuing company is profitable are called
Bonds that pay no interest unless the issuing company is profitable are called
a. collateral trust bonds.
b. debenture bonds.
c. revenue bonds.
d....
Bonds for which the owners' names are not registered with the issuing corporation are called
Bonds for which the owners' names are not registered with the issuing corporation are called
a. bearer bonds.
b. term bonds.
c. debenture bonds.
d....
The term used for bonds that are unsecured as to principal is
The term used for bonds that are unsecured as to principal is
a. junk bonds.
b. debenture bonds.
c. indebenture bonds.
d. callable bonds.
Answer: debenture...
The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
a. bond indenture.
b. bond debenture.
c....
An example of an item which is not a liability is
An example of an item which is not a liability is
a. dividends payable in stock.
b. advances from customers on contracts.
c. accrued estimated warranty...
The times interest earned ratio is computed by dividing income before interest expense by interest expense.
The times interest earned ratio is computed by dividing income before interest expense by interest expense.
Answer: fals...
If a company plans to retire long-term debt from a bond retirement fund, it should report the debt as current.
If a company plans to retire long-term debt from a bond retirement fund, it should report the debt as current.
Answer: fals...
The debt to total assets ratio will go up if an equal amount of assets and liabilities are added to the balance sheet.
The debt to total assets ratio will go up if an equal amount of assets and liabilities are added to the balance sheet.
Answer: tru...
Off-balance-sheet financing is an attempt to borrow monies in such a way to minimize the reporting of debt on the balance sheet.
Off-balance-sheet financing is an attempt to borrow monies in such a way to minimize the reporting of debt on the balance sheet.
Answer: tru...
The process of interest-rate approximation is called imputation, and the resulting interest rate is called an imputed interest rate.
The process of interest-rate approximation is called imputation, and the resulting interest rate is called an imputed interest rate.
Answer: ...
The implicit interest rate is the rate that equates the cash received with the amounts received in the future.
The implicit interest rate is the rate that equates the cash received with the amounts received in the future.
Answer: Tru...
If a long-term note payable has a stated interest rate, that rate should be considered to be the effective rate.
If a long-term note payable has a stated interest rate, that rate should be considered to be the effective rate.
Answer: Fals...
The replacement of an existing bond issue with a new one is called refunding.
The replacement of an existing bond issue with a new one is called refunding.
Answer: Tru...
Bond issue costs are capitalized as a deferred charge and amortized to expense over the life of the bond issue.
Bond issue costs are capitalized as a deferred charge and amortized to expense over the life of the bond issue.
Answer: Tru...
The cash paid for interest will always be greater than interest expense when using effective-interest amortization for a bond.
The cash paid for interest will always be greater than interest expense when using effective-interest amortization for a bond.
Answer: fals...
A bond may only be issued on an interest payment date.
A bond may only be issued on an interest payment date.
Answer: Fals...
Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense.
Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense.
Answer: Fals...
The stated rate is the same as the coupon rate.
The stated rate is the same as the coupon rate.
Answer: True...
The interest rate written in the terms of the bond indenture is called the effective yield or market rate.
The interest rate written in the terms of the bond indenture is called the effective yield or market rate.
Answer: Fals...
If the market rate is greater than the coupon rate, bonds will be sold at a premium.
If the market rate is greater than the coupon rate, bonds will be sold at a premium.
Answer: Fals...
Bond issues that mature in installments are called serial bonds.
Bond issues that mature in installments are called serial bonds.
Answer: Tru...
A mortgage bond is referred to as a debenture bond.
A mortgage bond is referred to as a debenture bond.
Answer: Fals...
Companies usually make bond interest payments semiannually, although the interest rate is generally expressed as an annual rate.
Companies usually make bond interest payments semiannually, although the interest rate is generally expressed as an annual rate.
Answer: Tru...
Each of the following are included in both the current ratio and the acid-test ratio except
Each of the following are included in both the current ratio and the acid-test ratio except
a. cash.
b. short-term investments.
c. net receivables.
d....
The numerator of the acid-test ratio consists of
The numerator of the acid-test ratio consists of
a. total current assets.
b. cash and marketable securities.
c. cash and net receivables.
d. cash,...
Accrued liabilities are disclosed in financial statements by
Accrued liabilities are disclosed in financial statements by
a. a footnote to the statements.
b. showing the amount among the liabilities but not...
The ratio of current assets to current liabilities is called the
The ratio of current assets to current liabilities is called the
a. current ratio.
b. acid-test ratio.
c. current asset turnover ratio.
d. current...
Which of the following is not acceptable treatment for the presentation of current liabilities?
Which of the following is not acceptable treatment for the presentation of current liabilities?
a. Listing current liabilities in order of maturity
b....
What does the current ratio inform you about a company?
What does the current ratio inform you about a company?
a. The extent of slow-moving inventories.
b. The efficient use of assets.
c. The company's...
How do you determine the acid-test ratio?
How do you determine the acid-test ratio?
a. The sum of cash and short-term investments divided by short-term debt.
b. Current assets divided by current...
Which of the following are not factors that are considered when evaluating whether or not to record a liability for pending litigation?
Which of the following are not factors that are considered when evaluating whether or not to record a liability for pending litigation?
a. Time period...
What condition is necessary to recognize an asset retirement obligation?
What condition is necessary to recognize an asset retirement obligation?
a. Company has an existing legal obligation and can reasonably estimate the...
An electronics store is running a promotion where for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. The coupons expire in one year. The store normally recognized a gross profit margin of 40% of the selling price on video games. How would the store account for a purchase using the discount coupon?
An electronics store is running a promotion where for every video game purchased, the customer receives a coupon upon checkout to purchase a second...
Which of the following is a characteristic of the expense warranty approach, but not the sales warranty approach?
Which of the following is a characteristic of the expense warranty approach, but not the sales warranty approach?
a. Estimated liability under warranties.
b....
Which of the following best describes the cash-basis method of accounting for warranty costs?
Which of the following best describes the cash-basis method of accounting for warranty costs?
a. Expensed based on estimate in year of sale.
b. Expensed...
Which of the following best describes the accrual method of accounting for warranty costs?
Which of the following best describes the accrual method of accounting for warranty costs?
a. Expensed when paid.
b. Expensed when warranty claims...
Use of the accrual method in accounting for product warranty costs
Use of the accrual method in accounting for product warranty costs
a. is required for federal income tax purposes.
b. is frequently justified on the...
Dean Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, and
Dean Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should...
Espinosa Co. has a loss contingency to accrue. The loss amount can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The amount of loss accrual should be
Espinosa Co. has a loss contingency to accrue. The loss amount can only be reasonably estimated within a range of outcomes. No single amount within...
Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements, a liability has been incurred for obligations related to product warranties. The amount of the loss involved can be reasonably estimated. Based on the above facts, an estimated loss contingency should be
Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements,...
Ortiz Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2010. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Ortiz recall all cans of this paint sold in the last six months. The management of Ortiz estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?
Ortiz Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2010. Because of a recently proven health...
Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty
Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales,...
A company is legally obligated for the costs associated with the retirement of a long-lived asset
A company is legally obligated for the costs associated with the retirement of a long-lived asset
a. only when it hires another party to perform the...
To record an asset retirement obligation (ARO), the cost associated with the ARO is
To record an asset retirement obligation (ARO), the cost associated with the ARO is
a. expensed.
b. included in the carrying amount of the related...
A contingent liability
A contingent liability
a. definitely exists as a liability but its amount and due date are indeterminable.
b. is accrued even though not reasonably...
A contingency can be accrued when
A contingency can be accrued when
a. it is certain that funds are available to settle the disputed amount.
b. an asset may have been impaired.
c....
Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2010, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad's offer. The Railroad's 2010 financial statements should include the following related to the incident:
Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2010, due to the admitted negligence of...
Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?
Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?
a....
Which of the following contingencies need not be disclosed in the financial statements or the notes thereto?
Which of the following contingencies need not be disclosed in the financial statements or the notes thereto?
a. Probable losses not reasonably estimable
b....
Which of the following is the proper way to report a gain contingency?
Which of the following is the proper way to report a gain contingency?
a. As an accrued amount.
b. As deferred revenue.
c. As an account receivable...
Which of the following terms is associated with recording a contingent liability?
Which of the following terms is associated with recording a contingent liability?
a. Possible.
b. Likely.
c. Remote.
d. Probable.
Answer: ...
Which of the following is an example of a contingent liability?
Which of the following is an example of a contingent liability?
a. Obligations related to product warranties.
b. Possible receipt from a litigation...
When is a contingent liability recorded?
When is a contingent liability recorded?
a. When the amount can be reasonably estimated.
b. When the future events are probable to occur and the amount...
What is a contingency?
What is a contingency?
a. An existing situation where certainty exists as to a gain or loss that will be resolved when one or more future events occur...
Which of the following taxes does not represent a payroll deduction a company may incur?
Which of the following taxes does not represent a payroll deduction a company may incur?
a. Federal income taxes.
b. FICA taxes.
c. State unemployment...
Under what conditions is an employer required to accrue a liability for sick pay?
Under what conditions is an employer required to accrue a liability for sick pay?
a. Sick pay benefits can be reasonably estimated.
b. Sick pay benefits...
Which gives rise to the requirement to accrue a liability for the cost of compensated absences?
Which gives rise to the requirement to accrue a liability for the cost of compensated absences?
a. Payment is probable.
b. Employee rights vest or...
What are compensated absences?
What are compensated absences?
a. Unpaid time off.
b. A form of healthcare.
c. Payroll deductions.
d. Paid time off.
Answer: paid time of...
The amount of the liability for compensated absences should be based on
The amount of the liability for compensated absences should be based on
1. the current rates of pay in effect when employees earn the right to compensated...
A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should
A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should
a. be accrued during the period...
Which of the following is a condition for accruing a liability for the cost of compensation for future absences?
Which of the following is a condition for accruing a liability for the cost of compensation for future absences?
a. The obligation relates to the...
Which of these is not included in an employer's payroll tax expense?
Which of these is not included in an employer's payroll tax expense?
a. F.I.C.A. (social security) taxes
b. Federal unemployment taxes
c. State unemployment...
An employee's net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee's
An employee's net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee's
a. portion of FICA...
In accounting for compensated absences, the difference between vested rights and accumulated rights is
In accounting for compensated absences, the difference between vested rights and accumulated rights is
a. vested rights are normally for a longer...
If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information except
If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event...
Which of the following is not a correct statement about sales taxes?
Which of the following is not a correct statement about sales taxes?
a. Sales taxes are an expense of the seller.
b. Many companies record sales taxes...
Which of the following statements is false?
Which of the following statements is false?
a. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance...
The ability to consummate the refinancing of a short-term obligation may be demonstrated by
The ability to consummate the refinancing of a short-term obligation may be demonstrated by
a. actually refinancing the obligation by issuing a long-term...
Which of the following statements is correct?
Which of the following statements is correct?
a. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance...
Which of the following situations may give rise to unearned revenue?
Which of the following situations may give rise to unearned revenue?
a. Providing trade credit to customers.
b. Selling inventory.
c. Selling magazine...
A company has not declared a dividend on its cumulative preferred stock for the past three years. What is the required accounting treatment or disclosure in this situation?
A company has not declared a dividend on its cumulative preferred stock for the past three years. What is the required accounting treatment or disclosure...
Which of the following does not demonstrate evidence regarding the ability to consummate a refinancing of short-term debt?
Which of the following does not demonstrate evidence regarding the ability to consummate a refinancing of short-term debt?
a. Management indicated...
Which of the following is not a condition necessary to exclude a short-term obligation from current liabilities?
Which of the following is not a condition necessary to exclude a short-term obligation from current liabilities?
a. Intend to refinance the obligation...
Where is debt callable by the creditor reported on the debtor's financial statements?
Where is debt callable by the creditor reported on the debtor's financial statements?
a. Long-term liability.
b. Current liability if the creditor...
What is a discount as it relates to zero-interest-bearing notes payable?
What is a discount as it relates to zero-interest-bearing notes payable?
a. The discount represents the lender's costs to underwrite the note.
b....
What is the relationship between present value and the concept of a liability?
What is the relationship between present value and the concept of a liability?
a. Present values are used to measure certain liabilities.
b. Present...
What is the relationship between current liabilities and a company's operating cycle?
What is the relationship between current liabilities and a company's operating cycle?
a. Liquidation of current liabilities is reasonably expected...
Why is the liability section of the balance sheet of primary importance to bankers?
Why is the liability section of the balance sheet of primary importance to bankers?
a. To evaluate the entity's credit quality.
b. To assist in understanding...
Which of the following is not considered a part of the definition of a liability?
Which of the following is not considered a part of the definition of a liability?
a. Unavoidable obligation.
b. Transaction or other event creating...
Which of the following is a characteristic of a current liability but not a long-term liability?
Which of the following is a characteristic of a current liability but not a long-term liability?
a. Unavoidable obligation.
b. Present obligation...
An account which would be classified as a current liability is
An account which would be classified as a current liability is
a. dividends payable in the company's stock.
b. accounts payable—debit balances.
c....
Of the following items, the only one which should not be classified as a current liability is
Of the following items, the only one which should not be classified as a current liability is
a. current maturities of long-term debt.
b. sales taxes...
Stock dividends distributable should be classified on the
Stock dividends distributable should be classified on the
a. income statement as an expense.
b. balance sheet as an asset.
c. balance sheet as a liability.
d....
Which of the following is a current liability?
Which of the following is a current liability?
a. Preferred dividends in arrears
b. A dividend payable in the form of additional shares of stock
c....
Which of the following should not be included in the current liabilities section of the balance sheet?
Which of the following should not be included in the current liabilities section of the balance sheet?
a. Trade notes payable
b. Short-term zero-interest-bearing...
Which of the following items is a current liability?
Which of the following items is a current liability?
a. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment)...
Which of the following may be a current liability?
Which of the following may be a current liability?
a. Withheld Income Taxes
b. Deposits Received from Customers
c. Deferred Revenue
d. All of these
Answer: all...
Which of the following is not true about the discount on short-term notes payable?
Which of the following is not true about the discount on short-term notes payable?
a. The Discount on Notes Payable account has a debit balance.
b....
Among the short-term obligations of Lance Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Madison National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Lance Company as
Among the short-term obligations of Lance Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Madison National...
Which of the following is true about accounts payable?
Which of the following is true about accounts payable?
1. Accounts payable should not be reported at their present value.
2. When accounts payable...
Which of the following is a current liability?
Which of the following is a current liability?
a. A long-term debt maturing currently, which is to be paid with cash in a sinking fund
b. A long-term...
Liabilities are
Liabilities are
a. any accounts having credit balances after closing entries are made.
b. deferred credits that are recognized and measured in conformity...
Current liabilities are usually recorded and reported in financial statements at their full maturity value.
Current liabilities are usually recorded and reported in financial statements at their full maturity value.
Answer: tru...
Paying a current liability with cash will always reduce the current ratio.
Paying a current liability with cash will always reduce the current ratio.
Answer: fals...
Prepaid insurance should be included in the numerator when computing the acid-test (quick) ratio.
Prepaid insurance should be included in the numerator when computing the acid-test (quick) ratio.
Answer: fals...
Under the expense warranty approach, companies charge warranty costs only to the period in which they comply with the warranty.
Under the expense warranty approach, companies charge warranty costs only to the period in which they comply with the warranty.
Answer: fals...
The cause for litigation must have occurred on or before the date of the financial statements to report a liability in the financial statements.
The cause for litigation must have occurred on or before the date of the financial statements to report a liability in the financial statements.
...
The fair value of an asset retirement obligation is recorded as both an increase to the related asset and a liability.
The fair value of an asset retirement obligation is recorded as both an increase to the related asset and a liability.
Answer: tru...
The expected profit from a sales type warranty that covers several years should all be recognized in the period the warranty is sold.
The expected profit from a sales type warranty that covers several years should all be recognized in the period the warranty is sold.
Answer:&nbs...
A company discloses gain contingencies in the notes only when a high probability exists for realizing them.
A company discloses gain contingencies in the notes only when a high probability exists for realizing them.
Answer: tru...
Companies should accrue an estimated loss from a loss contingency if information available prior to the issuance of financial statements indicates that it is probable that a liability has been incurred.
Companies should accrue an estimated loss from a loss contingency if information available prior to the issuance of financial statements indicates that...
Companies should recognize the expense and related liability for compensated absences in the year earned by employees.
Companies should recognize the expense and related liability for compensated absences in the year earned by employees.
Answer: tru...
Accumulated rights exist when an employer has an obligation to make payment to an employee even after terminating his employment.
Accumulated rights exist when an employer has an obligation to make payment to an employee even after terminating his employment.
Answer: fa...
Companies report the amount of social security taxes withheld from employees as well as the companies' matching portion as current liabilities until they are remitted.
Companies report the amount of social security taxes withheld from employees as well as the companies' matching portion as current liabilities until...
A company must accrue a liability for sick pay that accumulates but does not vest.
A company must accrue a liability for sick pay that accumulates but does not vest.
Answer: fals...
Many companies do not segregate the sales tax collected and the amount of the sale at the time of the sale.
Many companies do not segregate the sales tax collected and the amount of the sale at the time of the sale.
Answer: tru...
A short-term obligation can be excluded from current liabilities if the company intends to refinance it on a long-term basis.
A short-term obligation can be excluded from current liabilities if the company intends to refinance it on a long-term basis.
Answer: fals...
All long-term debt maturing within the next year must be classified as a current liability on the balance sheet.
All long-term debt maturing within the next year must be classified as a current liability on the balance sheet.
Answer: fals...
Discount on Notes Payable is a contra account to Notes Payable on the balance sheet.
Discount on Notes Payable is a contra account to Notes Payable on the balance sheet.
Answer: tru...
Magazine subscriptions and airline ticket sales both result in unearned revenues.
Magazine subscriptions and airline ticket sales both result in unearned revenues.
Answer: tru...
Dividends in arrears on cumulative preferred stock should be recorded as a current liability.
Dividends in arrears on cumulative preferred stock should be recorded as a current liability.
Answer: fals...
A zero-interest-bearing note payable that is issued at a discount will not result in any interest expense being recognized.
A zero-interest-bearing note payable that is issued at a discount will not result in any interest expense being recognized.
Answer: fals...
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