Liabilities in Financial Accounting Questions and Answers

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Liabilities in Financial Accounting Questions and Answers

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Jordons, Inc. borrowed $130,000 from 1st Star Bank on Oct 1, 2016. The loan stipulates that the interest rate is 6% annually, with the interest payable on the first day of each month, beginning Nov...
The maturity value of a note payable is: a. The amount on the face of the note. b. The amount of interest expense for the life of the note. c. The face amount plus the interest expense. d. None of...
Baltimore Company's complete assets and liabilities are accounts receivable $800, equipment $10,000, accounts payable $4,700, prepaid rent $2,000, supplies $400, bank loan $1,600, and tools $300. B...
After the adjustments have been completed, the adjusted balance in the interest payable account represents _____. a. Interest that has been prepaid on existing debt at the end of the period. b. Int...
Which of the following is not considered to be a liability? a. wages payable b. accounts payable c. notes payable d. cost of goods sold
Which of the following would not appear as a liability on the balance sheet? a. a labor contract b. a note due to a bank c. salary due employees at year-end d. accounts payable
On January 1, 2018, Baltimore Company issued $150,000 face value, 7%, 10-year bonds at 102. Interest is paid annually on January 1. Baltimore uses the straight-line method for amortization. Use thi...
Consider the following select information from the December 31, 2016 balance sheet and income statement for the year ended of Firm B. Determine the Paid-in capital recorded on 12/31/16. | | Firm B...
The total assets of Pharoah Company are $195,000 and its stockholders' equity is $89,000. What is the amount of its total liabilities?
In May 20X3, Nolanville repaid $2 million of the bonds that it had issued in 20X1. In its 20X3 fund and government-wide statements, Nolanville should report an expenditure/expense relating to the r...
Payments on mortgages should be debited to Cash and credited to Mortgages Payable. Mortgages are liabilities. a. True b. False
Lexington Company engaged in the following transactions during Year 1, its first year in operation: - Acquired $3,600 cash from issuing common stock. - Borrowed $2,500 from a bank. - Earned $3,400...
The following transactions are July activities of Josh's video service: 1. Josh paid $575 to plumbers for repairing a broken pipe in the restrooms. 2. Josh paid $461 for the June electricity bill...
A firm has assets of $60,000 and owners' equity of $33,000. Which of the following is the correct balance of the firm's liabilities? a. $33,000 b. $93,000 c. $27,000 d. $60,000
What happens to the market value of the banks liabilities if the interest rate falls by 2 percentage points?
At the beginning of the year, Morales Company had total assets of $845,000 and total liabilities of $532,000. If total assets decreased by $82,000 and stockholders' equity increased by $120,000 dur...
When warranty parts and labor are actually used, a debit is made to: a. inventory. b. cash. c. estimated warranty liability. d. wages.
A liability should only be recognised in the financial statements when: i. reserves have been set aside by the entity. ii. the amount can be measured reliably. iii. it is probable that the futur...
Krispy Kreme Doughnuts has current assets of $147 million; property, plant, and equipment of $206 million; and other assets totaling $58 million. Current liabilities are $154 million and long-term...
Which of the following is not a liability? a. Accounts payable b. Unearned revenue c. Wages payable d. Prepaid expense
On 1 January 2008, a company receives $835,500 on the issue of 8% debentures with a nominal value of $1,000,000 redeemable at par on 31 December 2013. Interest is payable on 31 December each year....
At December 31, Daniels Chocolate Company owes $200,000 under a 20- year mortgage to Interstate Industrial Bank. Approximately $11,000 of principal is due and payable the next year. How should the...
All liabilities which become due for payment in one year are classified as long-term liabilities. a. True b. False
Why are liabilities separated into current and long-term? a. Users want to know which amounts will be paid using current assets. b. Because current and long-term classifications are just common s...
The following items and amounts were taken from Blossom Company's 2022 income statement and balance sheet. Identify whether the following item is an asset, liability, stockholders' equity, revenue...
Dividends in arrears are reported as liabilities on the balance sheet. a. True. b. False.
An $8,000, 8% bond is sold at 94. When the bond is issued, the cash account will be increased by ______.
A company began the year with Assets of $100,000, Liabilities of $20,000, and Stockholders' equity of $80,000. During the year, assets increased $55,000 and stockholders' equity increased $20,000....
Liabilities: a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation.
Under the effective interest method of amortization, the amount of discount or premium amortized on each interest payment is equal to: A. The difference between interest expense and interest paid....
Refer to the following list of liability balances at December 31, 2017. Accounts payable $22,000 Employee health insurance payable $1,450 Employee income tax payable $400 Estimated warranty payable...
Indicate whether the statement is true or false. The borrower is the one who issues a note payable to a creditor.
Pepsi Corporation's current ratio is 0.5, while Coke Company's current ratio is 1.5. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressin...
Rick transferred the following assets and liabilities to Walkin' D Corporation. Adjusted Basis ($) Fair Market Value ($) Secure farmland 210,000 225,000 Zombie killing equipment 45,000 75,000 Escap...
An amount of money that you owe to other people is called what?
On April 26, Kindler Welding Corp. purchased $8,640 worth of welding supplies from a wholesaler that offered terms of 1.75/7, net/30. The discount applies to any amount paid within the discount per...
A short-term note payable: A. is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer. B. is a contingent li...
True or False: Cash, supplies, and prepaid insurance are liability accounts.
A firm has a net working capital of $640. Long-term debt is $4,180, total assets are $6,230, and fixed assets are $3,910. What is the amount of the total liabilities?
Francisco leased equipment from Julio on December 31, 2016. The lease is a 10-year lease with annual payments of $152,000 due on December 31 of each year beginning December 31, 2016. The present va...
Estimated liability for product warranties to be paid in the future is a long-term liability. a. True b. False
On February 16, a company declares a 47 cents dividend to be paid on April 5. There are 2,130,000 shares of common stock issued and outstanding. The entry recorded by the company on February 16 inc...
What are the obligations of a company not requiring payment within one year or the operating cycle, whichever is longer?
The following balance sheet is for X Company: Balance Sheet January 1, 2015 Assets: Equities: Cash $54,342 Accounts payable $226,404 Accounts receivable $11,765 Wages payable $1,302 Inventory $151,...
A company entered into the following transactions: 1. Borrowed $5,100 from the bank by signing a promissory note. 2. Issued stock to owners for $11,000. 3. Purchased $1,100 of supplies, on the acco...
Schwartzwald Company estimates that its liability 8 years from now will be $3,000,000 to provide restoration of land it uses in its mining operation. Their financing rate is 8%. Determine the amou...
On December 31, 2015, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring December 30, 2022. Equal annual payments of $300,000 are due on December 31 of each year, b...
Long-term liabilities are obligations that will extend beyond one year or the normal operating cycle, whichever is longer. a. True b. False
The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.: Net sales $10,823 Total assets 4,501 End of year balance in cash 1,049 Total stockholders' equity 47...
Which of these items are liabilities of White Glove Cleaning Service? a) Cash b) Equipment c) Accounts payable. d) Salaries and wages e) Dividends payable f) Accounts receivable g) Service revenue...
Consider the following balance sheet item: Notes Payable (due in 3 years). Which of the following is its balance sheet classification? a. Current Assets b. Long-term Investments c. Plant Assets d....
Payables are classified as: A) decreases in earnings. B) assets. C) increases in earnings. D) liabilities.
Martin, Inc. is preparing its financial statements for December 31, 2016. Martin has a $2,000,000 short-term note that is due in June 2017. Due to an existing long-term line of credit for $1,500,00...
Explain whether the following statement is always true, sometimes true, or never true: If a transaction increases a liability, it will also increase an expense.
The State Fair Company completed the following transactions during 2014. The annual accounting period ends on December 31, 2014. April 1 Borrowed $700,000 from Borlaug Bank for general use; execute...
The characteristic shared by all liabilities is that they: A. obligate the company to do something in the future. B. result in an inflow of resources to the company. C. provide a future economic...
Libby Company purchased equipment by paying $5,000 cash on the purchase date and agreeing to pay $5,000 every six months during the next four years. The first payment is due six months after the pu...
The unearned rent account has a balance of $37,000. If $6,000 of the $37,000 is unearned at the end of the accounting period, the amount of the adjusting entry is _____.
Electronics4U manufactures high-end whole-home electronic systems. The company provides a 1-year warranty for all products sold. The company estimates that the warranty cost is $200 per unit sold,...
What is meant by the term liability?
Assume that Cart Sales Company completed the following note payable transactions: 2016: Jul. 1 Purchased delivery truck costing $57,000 by issuing a one-year, 6% note payable Dec. 31 Accrued inter...
What type of account is a loan for an office building?
Maridell's Fashions has a debt that has been properly reported as a long-term liability up to the present year (2016). Some of this debt comes due in 2016. If Maridell's Fashions continues to repor...
The December 31, 2016 (pre-closing) adjusted trial balance for Sunshine Enterprises follows. Calculate the total current liabilities. | Account Title | Debits | Credits | Accounts payable | | 90,...
On November 1, Year 1, Noble Co. borrowed $96,000 from South Bank and signed a 7%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, Year...
Use the following appropriate amounts to calculate net income. Revenues $10,100 Liabilities $4,900 Expenses $4,500 Assets $19,000 Dividends $1,900
On December 31, the Philip Corporation had the following account balances. Accounts payable $2,300 Income taxes payable $1,900 Accounts receivable $16,300 Rent expense $3,900 Cash $17,900 Retained...
During 2014, Leucothea Co. became involved in a legal dispute with a supplier. At December 31, 2014, Leucothea's legal advisor believed that an unfavorable outcome was probable. A reasonable estima...
On April 1, 2012 ABC Company loaned $240,000 to Michelle Jackson. The note is due in 1 year and bears an annual interest rate of 10%. No payments will be made to ABC Company until the maturity date...
What distinguishes a short-term liability from a long-term liability?
Foster Corporation received the following report from its actuary at the end of the year: December 31, 2014 December 31, 2015 Projected benefit obligation $2,000,000 $2,200,000 Accumulated benefit...
A company reports total assets of $1,900 and total stockholders' equity of $320. What is the amount of total liabilities?
Why are payroll taxes and sales taxes considered liabilities?
Why is Unearned Revenue considered a liability?
Wolfe Inc. Wolfe Inc. reports these account balances at January 1, 2015: $ Retained Earnings 49,000 Accounts Receivable 20,000 Accounts Payable 24,000 Capital Stock 185,000 Land 153,000 Cash 13,000...
A cereal company includes one premium coupon in every cereal box. Upon returning 10 such coupons to the company, a customer will be sent a free cereal bowl. In a recent year, the company sold 200,0...
Montauk Oil Co. reports these account balances at December 31, 2014: Accounts payable $102,000 Land $192,000 Notes payable $252,000 Equipment $152,000 Cash $72,000 Accounts receivable $92,000 Build...
Identify the account below that is classified as a liability in a company's chart of accounts. a. Salaries expense. b. Cash. c. Unearned revenue. d. Accounts receivable. e. Supplies.
For the following account, determine whether the account increases with a debit or a credit: Dividends Payable.
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,150,000 in 2018 for the mining site and spent an additional $630,000 to prepare the mine for the extraction of...
The total assets of Rivera Company are $61,000. Owner's capital account is $15,000; drawings are $5,800; revenues, $47,000; and expenses, $42,000. What is the amount of the company's total liabilit...
For business combinations involving 90 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except: a. identifiable assets acquired, at fair value b....
Which of the following is not a liability? A) Accounts payable B) Notes payable C) Land D) Salary payable
Sun Limited has a debt ratio of 0.57, current liabilities of $14,000, and total assets of $70,000. What is the level of Sun Limited's total liabilities? A. $53,900 B. $39,900 C. $24,600 D. $25,900
Spinnit, Limited has a: Debt ratio 0.57 Current liabilities $14,000 Total assets $70,000 What is the level of Spinnit, Limited's total liabilities?
The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows. Preferred Stock (8%, $100 par noncumulative, 5,400 shares authorized) $324,000 Common Stock ($5 stated va...
HiTech Manufacturing Company has 1,000,000 shares of $1 par value capital stock outstanding on January 1. The following equity transactions occurred during the current year: Apr. 30 Distributed...
A company issued 25,000, 10-year, 5 percent, $100 bonds on January 1 at face value. Interest is payable each December 31. (a) The issuance of these bonds on January 1. (b) The first interest paymen...
If a company's total assets decreased by $6,300 and stockholders' equity decreased by $12,500 during a period of time, then total liabilities must have changed by what amount and direction during t...
If total assets increased by $31,200 and stockholders' equity increased by $18,200 during a period of time, then total liabilities must have changed by what amount and direction during that same pe...
Edge Company's salaried employees are paid biweekly. Occasionally, advances made to employees are paid back by payroll deductions. Information relating to salaries for the calendar year 2011 is as...
Which of the following is not a liability? a. AR b. Notes Payable c. AP d. Unearned Fees
Is it better to have more money in liabilities or equity?
For the following item, indicate the type of adjusting entry that is needed to correct the misstatement: Liabilities are overstated. If the item could result in more than one type of adjusting entr...
The cost of merchandise sold for Patterson Corporation for a recent year was $12,351 million. The balance sheet showed the following current account balances (in millions): Balance, end of year Bal...
As of June 30, 2013, Actual Tigers Company has assets of $90,000 and stockholders' equity of $35,000. What are the liabilities for Actual Tigers Company as of June 30, 2013?
If a company has total assets of $53,800 and stockholders' equity of $22,400, what is the value of its total liabilities?
If total assets of a company equal $29,900 and total stockholders' equity equals $18,400, what is the value of total liabilities?
The maturity value of a note is the __________. A. principal amount minus interest due at maturity B. principal amount plus interest due at maturity C. principal amount times the interest rate...
Answer true or false: Issuing a 3-month, 10%, $10,000 note decreases assets and decreases liabilities.
Consider the following transaction: | Account | Related Transaction | Account Classification | Notes payable | Borrow from the bank | Indicate whether the related account above would be classif...
On November 1, 2015, 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, 2016. New Morning Bakery should r...
Purchasing a building for $100,000 by paying cash of $20,000 and obtaining a mortgage (loan) for $80,000 will: a. increase both total assets and total liabilities by $100,000 b. increase both total...
State true or false and justify your answer: The amount of sales tax collected is a liability of a business until paid to the government.
The usual difference between accounts payable and notes payable is: a. legally enforceable debt b. current-noncurrent classification c. known payment terms d. explicitly stated interest
True or false? Payment terms, interest rates, and other details of long-term liabilities usually are reported in disclosure notes.
Which of the following is true of unearned revenue? a. It represents revenue that has been earned but not yet received. b. Liabilities are increased when unearned revenue is earned. c. Assets are d...
Which of the following is a liability account? a. Retained Earnings b. Equipment c. Utilities payable d. Common stock
The current asset section of Sanford & Son, CPA's balance sheet consists of cash, accounts receivable, investments, and prepaid expenses. The 2013 balance sheet reported the following: cash, $110,0...
United Supply has a $5 million liability at December 31, 2021, of which $1 million is payable in each of the next five years. United Supply reports the liability in the balance sheet as a: a. $5 mi...
Brian Inc. borrowed $8,000 from First Bank and signed a promissory note. What journal entry should Brian Inc. use to record this transaction?
Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current? a. It may cause the firm to appear less risky to investors and creditors. b...
The following balance sheet is for X Company: Balance Sheet January 1, 2015 Assets Equities Cash $51,211 Accounts Payable $227,585 Accounts Receivable $13,689 Wages Payable $1,425 Inventory $151,10...
True or false? Amounts owed to suppliers, workers, governments, and utility companies are examples of liabilities.
For the following account title, complete the table by providing its classification, financial statement it belongs to and the normal balance: Income Taxes Payable. | Account Title | Classificati...
For the following account title, complete the table by providing its classification, financial statement it belongs to and the normal balance: Dividends Payable. | Account Title | Classification...
Which of the following increases liabilities but not assets? a. taking out a loan to buy a new car b. taking out a loan to go on vacation c. using a credit card to buy a computer d. paying off a st...
When a business takes out a loan from the bank, which account is debited?
State true or false and justify your answer: Dividends in arrears are liabilities of the corporation.
Notes payable due within five years are classified as: a. current liabilities b. current assets c. long-term liabilities d. long-term assets
____ represents a debt owed for renting a building currently. a. Prepaid rent b. Rent payable c. Rent revenue d. Rent expense
M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment...
During the year, L&M Leather Goods sold 1,080,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles the customer to a $4.80 cash rebate. L&M estim...
If Salaries and Wages Expense is $450,600 during the year and the beginning and ending balances of Salaries and Wages Payable are $18,300 and $16,800, respectively, the cash paid to employees is: A...
State true or false and justify your answer: When a business borrows money from a bank, the immediate effect is an increase in the total assets and a decrease in the liabilities or owners' equity.
The assets and owners' equity of a company are $45,600 and $29,200, respectively. What should liabilities equal?
One type of liability that is easy to overlook is a(n) A. tax liability. B. account payable. C. contingent liability. D. note payable.
Which of the following would not be a liability? A. An obligation that is estimated in amount B. The signing of a three-year employment contract at a fixed annual salary C. A note payable with no s...
ABC Company began operations on August 1, 2021, and entered into the following transactions during 2021: 1. On August 1, ABC Company sold common stock to owners in the amount of $200,000 and borrow...
Consider the following item for Fielder Enterprises: Sales taxes payable. Determine how it should be classified. a. Property, Plant and Equipment b. Current Assets c. Not to be reported d. Curre...
Which of the following is also referred to as debt? a. Revenues b. Assets c. Stockholders' equity d. Expenses e. Liabilities
Which of the following would be considered a long-term liability? a. a charge account payment b. a mortgage c. an installment loan d. an amount due for taxes e. the amount due on a credit card
If an expense is incurred but not paid, then: a. liabilities will increase b. stockholders' equity will increase c. assets will decrease d. expenses will decrease
A contingent liability ______. (a) is always of a specific amount (b) is a potential obligation that depends on a future event arising out of a past transaction or event (c) is an obligation not re...
At the beginning of the year, the long-term debt of a firm was $72,918 and the total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest...
(a) What is a liability? (b) Give examples of liability accounts.
Fridley Manufacturing's accounting records reveal the following account balances after adjusting entries are made on December 31, 2020: Accounts payable $52,600 Bonds payable (9.4%, due in 2027) $3...
California Tennis Center, Inc. borrowed $26,000 from the bank by signing a two-year note payable. Prepare the general journal entry to record this transaction.
California Tennis Center, Inc. paid a note payable of $15,000 plus interest of $150. Prepare the general journal entry to record this transaction.
Explain the difference between a current and a long-term liability.
The account type for accrued wages account is ______. a. Other Current Liabilities b. Other Current Assets c. Income d. Expenses
Identify whether the following item would be classified on a balance sheet as a current liability, a long term-liability or something else: Notes payable (due in 2 years).
Identify whether the following item would be classified on a balance sheet as a current liability, a long term-liability or something else: Current portion of long-term debt.
True or false? Checkable deposits are liabilities of commercial banks.
True or false? Liabilities are extended to the balance sheet section of the worksheet.
Commonly, current liabilities are payable within one year and long-term liabilities are payable more than one year from now. (a) True (b) False.
What is the difference between an account payable and a note payable? a. An account payable is a signed promissory note. b. A note payable is owed to a bank. c. An account payable is usually due in...
Obligations to other entities are known as: a. equity b. intangibles c. liabilities d. investments
On January 1 of Year 1, Congo Express Airways issued $3,600,000 of 6% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,270,000 and the market rate of interes...
a. Do owners or creditors have more claims on a company's assets? b. How can you tell?
A company with no liabilities is good for investors. (a) True (b) False.
a. What is the difference between a current liability and a contingent liability? Give an example of each. b. How are the accounting treatments different for each of these?
Which of the following is not considered to be a liability? (a) Accounts payable (b) Unearned revenue (c) Wages payable (d) Cost of goods sold.
Ruiz Consulting paid Taylor Supply $400 for office supplies that were previously purchased on account. Prepare the general journal entry to record this transaction.
Liabilities are classified as current or long-term based on their amount. (a) True (b) False.
True or false? Liability accounts include accounts payable, unearned revenues, and notes payable.
On July 1, JR Company received a loan of $20,000, due in 1 year, with an annual interest rate of 10%. Prepare the general journal entry to record this transaction.
True or false? A credit to a liability account indicates an increase in the amount owed to creditors.
Alda Inc. had assets of $255,000 and liabilities of $127,000 at the beginning of the year. During the year, revenues were $143,000 and expenses were $91,000. Also, during the year the business paid...
In Oregon, employers who are covered by the state workers' compensation law withhold employee contributions from the wages of covered employees for the workers' benefit fund at the rate of 1.4 for...
Distinguish between a current liability and a long-term debt.
The following items are found in the financial statements. a) Discount on bonds payable. b) Interest expense (credit balance). c) Unamortized bond issue costs. d) Gain on repurchase of debt. e...
Logan Lodging Services Company reported the following information: Assets, 1/1/04 $970,000 Assets, 12/31/05 1,250,000 Revenues during 2004 1,630,000 Revenues during 2005 1,810,000 Expenses during 2...
On June 6, Northend Bank & Trust lent $90,000 to Shari Silverthorn on a 60-day, 6% note. 1) Journalize for Northend the lending of the money on June 6. 2) Journalize the collection of the princip...
Consider the following note payable transactions of Caldwell Video Productions. 2014: Apr. 1 Purchased equipment costing $198,000 by issuing a nine-year, 8% note payable. The note requires annual p...
In exchange for television advertising services that Pauli Company received last month, Pauli is obligated to provide the television station with building maintenance service for the next four mont...
W. S. Blaskowski Foodservices entered into the following transactions during May 2008. 1. Purchased kitchen equipment for $30,000 from General Appliances on the account. 2. Paid $3,000 cash for M...
Name the element used to describe creditors' claims on the assets of a business.
Which of the following statements best describes the difference between current and long-term liabilities? a. Current liabilities are debts that need to be paid immediately, whereas long-term liabi...
Who is the maker of a note payable?
What are the main categories of short-term liabilities?
What are the main categories of long-term liabilities?
Which of the following items are normally classified as a current liability for a company that has a 15-month operating cycle? 1. Salaries payable. 2. Note payable due in 19 months. 3. FICA taxe...
If salaries payable were $75,000 at the beginning of the year and $60,000 at the end of the year, should $15,000 be added to or deducted from income to determine the amount of cash flows from opera...
Assume a bank has $200 million of assets with a duration of 2.5 and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, the net worth of the...
The sum of the Fed's monetary liabilities and the U.S. Treasury's monetary liabilities is called: A) the money supply. B) currency in circulation. C) bank reserves. D) the monetary base.
Both __________ and __________ are monetary liabilities of the Fed. A) government securities; discount loans B) currency in circulation; reserves C) government securities; reserves D) currency...
Which of the following are not reported as assets on a bank's balance sheet? A) Cash items in the process of collection B) Deposits with other banks C) U.S. Treasury securities D) Checkable dep...
In general, banks make profits by selling ________ liabilities and buying ________ assets. A) long-term; shorter-term. B) short-term; longer-term. C) illiquid; liquid. D) risky; risk-free.
At the end of the current accounting period, account balances were as follows: Cash $29,000 Accounts Receivable $44,000 Common Stock 22,000 Retained Earnings $11,000 Liabilities for the period were...
Presented here are liability items for Larkspur Inc at December 31, 2022. Accounts payable $227,650 FICA taxes payable $11,310 Notes payable (due May 1, 2023) 29,000 Interest payable 58,000 Bonds p...
Presented here are liability items for Marin Inc. at December 31, 2022. Accounts payable $141,300 FICA taxes payable $7,020 Notes payable (due May 1, 2023) 18,000 Interest payable 36,000 Bonds paya...
Indicate whether the following is true (T) or false (F). Long-term liabilities are reported in a separate section of the balance sheet immediately following current liabilities.
Money received in advance before it is actually due will be a) debited to calls paid in advance account b) debited to calls in arrears account c) credited to calls in arrears account d) credited t...
Interest on calls in advance and calls in arrears should be paid at 1.6% Interest on calls in advance and calls in arrears should be paid at: a. 6% b. 5% c. 9% d. none of the above.
During 2015: Earned revenue of $87,600 of which $78,500 had been collected in cash with $9,100 still due from customers. This amount does not include the balance in the "Advances from Customers" a...
On January 15, 2012, CTTI Company acquired equipment costing $15,000. CTTI paid $3,000 cash and signed a note payable for the rest. Prepare the general journal entry to record this transaction.
Which are current and non-current liabilities? 1) A note payable due in 18 months 2) Salaries payable 3) A payable that matures in 2 years
Long-term liabilities are obligations: a. Not due to be paid within one year or the current operating cycle of the business. b. Due to be paid or liquidated within one year or one operating cycle o...
What is the difference between fully secured liabilities, partially secured liabilities, and unsecured liabilities?
The total assets of Dylan Company are $57,000. The owner's capital account is $25,000, drawings are $7,000, revenues are $52,000, and expenses are $35,000. What is the amount of the company's total...
Outback Camera Co. was organized to sell a single product that carries a 60-day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require a...
What is the term for an obligation to convey resources to another entity in the future?
Why is it useful to report short-term liabilities separately from long-term liabilities when preparing the balance sheet?
Mae Jong Corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. The market rate of interest on similar bonds is 12%. Interest is pay...
All of Rolf Co.'s employees are entitled to two weeks of paid vacation for each full year in Rolf's employ. Unused vacation time can be accumulated and carried forward to succeeding years and will...
Blue Socks' account balances at June 30, 2014, include the following: Cash $138,000 Salary payable $6,500 Long-term notes payable 117,000 Building, net of depreciation 780,000 Accounts payable 13,2...
Sydney Park Fitness Gym has Unearned revenue of $10,000, Salaries payable of $15,000, and Allowance for uncollectible accounts of $5,000. What amount would Sydney report as Total current liabilitie...
A company received an order for $12,000 in services to be provided. With the order was a deposit of $3,500. Prepare the general journal entry to record this transaction.
Ava Corporation borrowed $71,880 from the bank on November 1, Year 1. The note had a(n) 7 percent annual rate of interest and matured on April 30, Year 2. Interest and principal were paid in cash o...
On January 1 of Year 1, Congo Express Airways issued $3,650,000 of 8% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,350,000 and the market rate of interes...
Reserving liabilities involves the calculation of the amount that the insurer needs to set aside to pay future claims. It's equivalent to the __________ of a nonfinancial firm. a. equity b. asset...
Which of the following is considered to be a liability on the balance sheet of a firm? A. Plant and Equipment B. Accounts Receivable C. Retained Earnings D. Corporate Bonds
Which of the following items are liabilities of Karl Jewelry Stores? (a) Cash. (b) Accounts payable. (c) Owner's drawings. (d) Accounts receivable. (e) Supplies. (f) Equipment. (g) Salaries and wag...
How does borrowing cash from a bank on a 90-day note payable affect net income and cash from operations? Explain whether each of these measures increases, decreases, or is not affected.
Assets and liabilities come into existence at different times and are not affected the same way by inflation and specific price level changes. True False
Pedrick, Inc. reports the following liabilities (in thousands) on its January 31, 2012, balance sheet and notes to the financial statements. Accounts payable $4,263.9 Mortgage payable $6,746.7 Accr...
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December 31: (a) neither the note payable nor the interest payable is a current liability. (b) the note payable is a current l...
Which of the following accounts is a liability? a. Depreciation expense b. Dividends c. Accumulated depreciation d. Unearned advertising fees e. None of the above
Which of the following items is not a liability? a. The balance due on your credit card b. The wages you give up to take a class c. Your college loans d. An IOU to your roommate
In May of 2013, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2013, the environmental attorney for Raymond indicated that an unfavorable outcome to t...
Weldon Engineering owes one of its creditors $20,000. To settle the debt, Weldon pays $5,000 cash and also issues common stock valued at $15,000 to the creditor. How would this repayment of the $20...
Frisch Fish Corp. expected net income next year to be $600,000. Inventory and accounts receivable will have to be increased by $300,000 to accommodate this sales level. Frisch will pay dividends of...
Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is: a. liable for payment of the $10,000. b. liable only if Ned...
A party who filed a financing statement covering inventory on April 1, 2010 would have a superior interest to which of the following parties? a. A holder of a mechanic's lien whose lien was filed o...
Rob Judson Company had the following transactions involving notes payable. 1-Jul-11 Borrows $50,000 from Third National Bank by signing a 9-month, 12% note. 1-Nov-11 Borrows $60,000 from DeKalb Sta...
A corporation records a dividend-related liability: A. on the record date. B. on the payment date. C. when dividends are in arrears. D. on the declaration date.
Baron, Inc. has total current assets of $1,000,000; total current liabilities of $600,000; and long-term assets of $800,000. How much is the firm's Total Liabilities & Equity? a. $400,000 b. $1,8...
Mention the reasons why a negative cash balance is reported as a liability.
When does sales tax become a liability?
Where are current liabilities separated from long-term liabilities?
Can debt ever comprise liabilities?
In March 2013, an explosion occurred at Kirk Co.'s plant, causing damage to area properties. By May 2013, no claims had been asserted against Kirk. However, Kirk's management and legal counsel conc...
The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts. Interest Payable $9,000 Lease Liability 89,500 Bonds Payable, due 2022 180,000...
What is the term for an economic obligation (a debt) payable to an individual or an organization outside the business?
Michael's Motors has assets of $4,550 and net assets of $3,200. What is the amount of liabilities?
Classify the Wages Payable account as one of the following. a. current asset b. non-current asset c. current liability d. non-current liability e. equity account
Within the current liabilities section, how do you believe the accounts should be listed? Defend your position.
What evidence is necessary to demonstrate the ability to consummate the refinancing of short-term debt?
Distinguish between an adjunct account and a contra account.
Is it true that liabilities are always bad? Explain.
Cypress Appliance store has $100,000 of account receivable on its books on January 2, 2008. These receivables are due on December 31, 2008. The firm wants to use these accounts receivables to obtai...
A company borrowed $8,000 from the bank on a note payable. How does this event affect the accounting equation?
Craig Corporation's accounting records reveal the following account balances after adjusting entries are made on December 31, 2008: \\ Accounts payable. . . . .$73,000 Bonds payable (9.4%, due in 2...
What type of liabilities are not recorded on a company's books?
Indicate whether each of the following is (a) A definitely determinable liability, (b) An estimated liability, (c) A commitment, or (d) A contingent liability: 1. Dividends payable 2. Pending li...
The following situations relate to Bolivia Company. 1. Bolivia provides a warranty with all its products it sells. It estimates that it will sell 1,000,000 units of its product for the year ended D...
The last installment payment on a three-year note payable is due next month. Should a liability be reported on the balance sheet? If so, suggest an account name and indicate whether it should be re...
Assume that your friend, who is a music major, asks you to define and discuss the nature of a liability. Assist him by preparing a definition of a liability and explaining to him the elements or fa...
Which of the following is a current liability? a. Unearned rent income b. Prepaid interest c. Land d. Common stock e. None of the above
Which of the following is not a typical current liability? a. Accounts payable b. Wages payable c. Interest payable d. Pension liabilities e. Taxes payable
Which of the following accounts would not usually be classified as a current liability? a. Accounts Payable b. Wages Payable c. Unearned Rent Income d. Bonds Payable e. Taxes Payable
At the balance sheet date, a business owes a mortgage note payable of $750,000, the terms of which provide for monthly payments of $15,000. Explain how the liability should be classified on the bal...
On December 31, 2017, Pin a Company had $1,303,000 of short-term debt in the form of notes payable due February 2, 2018. On January 21, 2018, the company issued 25,400 shares of its common stock fo...
Use the adjusted trial balance for Stockton Company to answer the question that follows. Stockton Company Adjusted Trial Balance December 31 Cash 6,573 Accounts Receivable 2,822 Prepaid Expenses 6...
On January 2, 2009, Hill Company borrowed $10,000 from Bank Three. The loan was to be repaid in equal principal installments of $2,000, payable on December 31 of each year, beginning on December 31...
Which of the following is considered a liability? A. interest B. revenue C. unearned revenue D. sales revenue E. rent revenue
Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. True False
On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year-end on the worksheet would: a. increase a liability accoun...
Which type of legal entity has the least amount of legal liability to its owner/partner/shareholder? a. sole proprietorship b. partnerships c. corporation d. all have the same legal liability
Craig's Cars has assets of $4,550 and net assets of $3,200. What is the amount of liabilities? What is the amount of claims?
The carrying value of a long-term note payable: (a) Is computed as the present value of all remaining interest payments, discounted using the note's rate of interest. (b) Is computed as the present...
RS company borrowed $70,000 on December 1st on a 6-month, 12% note. Which statement is true at December 31? a.) neither the note payable nor the interest payable is a current liability. b.) both th...
Which of the following is not an example of liability that is estimated in amount? \\ a. obligations for gift certificates outstanding b. obligation under a loan guarantee agreement c. accrued v...
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 tax payable. c. short-term obligations expecte...
In packages of its products, Wiseman Inc. includes coupons that may be presented at retail stores to obtain discounts on other Wiseman products. Retailers are reimbursed for the face amount of coup...
A special form on which is recorded pertinent data about liability and the particulars of its payment is called a(n): a. voucher b. remittance advice c. invoice d. debit memo
Which of the following is not considered to be a liability? a. Wages Payable b. Accounts Receivable c. Unearned Revenues d. Accounts Payable
Most businesses, particularly larger ones, have outstanding claims (financial obligations) of a wide variety of types from a wide variety of claimants at any given moment. Why is there this diversi...
What is the carrying value of a long-term note payable?
Use the following information in the adjusted trial balance for Stockton Company. Stockton Company Adjusted Trial Balance For the Year ended December 31, 2010 Cash $6,030 Accounts Receivable 2,100...
If a corporation has $1,800,000 of short-term debt it expects to retire from the sale of 60,000 shares of stock for $20 per share subsequently to the balance date, what amount is excluded?
How is the Income Tax Payable account classified on the balance sheet? a. current liability b. long-term liability c. current or long-term liability d. none of the above
How is a bond payable (due within 3 months) classified on the balance sheet? a. current liability b. long-term liability c. current or long-term liability d. none of the above
How is the Rent Payable account classified on the balance sheet? a. current liability b. long-term liability c. current or long-term liability d. none of the above
Mike Gomez owns a music store called Mike's Music. The store has inventory that includes pianos, guitars, and other musical instruments. Mike rents the building in which his store is located but ow...
Where and how are Bonds Payable and Discount on Bonds Payable listed on the balance sheet?
What is a liability? Provide two examples of liability accounts.
Ned Johnson, a star college basketball player, received a contract from the Midwest Blazers to play professional basketball. The contract calls for a salary of $300,000 a year for four years, depen...
Why would a balance sheet list current liabilities as negative amounts?
What is the definition of retained earnings?
How are customer advances reported on a December 31, 2021 balance sheet? a. not reported b. current liability c. long-term liability d. disclosure note only e. asset
Which of the following is not a liability? A. Unearned Revenue B. Accounts Payable C. Accounts Receivable D. Interest Payable
Unearned revenue is always a(n): a. Asset b. Liability c. Revenue d. Owner's equity because you collected the cash in advance
Crag's has assets of $5,550 and net assets of $4,200. What is the amount of liabilities?
Distinguish between current and long-term liabilities.
Definite financial obligations are referred to as: a. variable expenses b. fixed expenses c. equity d. investment assets
With regard to liabilities, liquidity refers to: A. a company's ability to convert its assets to cash to pay for its liabilities. B. a company's ability to use its financial resources to adapt to...
All of the following are examples of legal liabilities except A. property taxes payable. B. sales tax payable. C. notes payable. D. sick pay payable (may be taken as time off).
When the expected cost to dismantle and remove an asset exceeds the expected selling price of a depreciable asset, the difference is: A. added to cost to determine the depreciable base. B. deduct...
Employees earned $3600 in salaries that will be paid next month. The salary expense unadjusted balance as of December 31st is $5,200. What is the adjustment type?
Commercial paper that is sold without going through a broker or dealer is known as: a. dealer paper b. direct paper c. a book-entry transaction d. term paper
The following items appear on the balance sheet of a company with a two-month operating cycle. Identify the proper classification of each item as follows: __Cif__ it is a current liability, __Lif__...
During 2011, Deluxe Leather Goods sold 800,000 reversible belts under a new sales promotional program. Each belt carried one coupon which entitles the customer to a $5.00 cash rebate. Deluxe estima...
The key accounting considerations relating to accounts payable are: A) Determining their existence and ensuring that they are recorded in the appropriate accounting period. B) Determining their p...
Frequent-flyer programs have grown into significant obligations for airlines. Why should a liability be recorded for those programs?
A firm paid $128 million in income taxes during a year. Income taxes payable at the beginning of the year were $67 million and $23 million at the end of the year. There were no deferred taxes. What...
On September 1, 2012, Southwest Airlines borrows $40 million, of which $8 million is due next year. Show how Southwest Airlines would record the $40 million debt on its December 31, 2012, balance s...
Computer World reports an income tax expense of $240,000. Income taxes payable at the beginning and end of the year are $55,000 and $65,000, respectively. What is the cash paid for income taxes dur...
On January 1, Manning Company purchased equipment of $240,000 with a long-term note payable. The debt is payable in annual installments of $48,000 due on December 31 of each year. At the date of pu...
What are the three main characteristics of liabilities?
Accounts payable are debts that must be paid off. Accrued An accounting term for an expense that a business has incurred but has not yet paid. Does this mean the same thing?
Current liabilities are: a. due but not receivable for more than one year. b. due but not payable for more than one year. c. due and receivable within one year. d. due and payable within one ye...
Assume that on December 1, 2010, your company borrowed $14,000 a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 20...
Which of the following transactions changes the mix of only liabilities? (a) Writing off accounts receivable as bad debt (b) Paying accounts receivable with cash (c) Financing the purchase of land...
What does the term "actuarial liability" mean?
Certain liability and net worth items generally increase spontaneously with increases in sales. Put a checkmark next to those items that typically increase spontaneously. Accounts payable ________...
Indicate the effects of Cash is obtained through a bank loan on operating margin, invested capital turnover, and debt ratio. Use + to indicate an increase, - to indicate a decrease, and 0 to indica...
Which of the following statements is CORRECT? a. Commercial paper is a form of short-term financing that a primarily used by large strong financially stable companies. b. Short-term debt is favor...
Discuss the meaning of limited liability.
As it would be shown on a comparative balance sheet, what is the change in percentage for total liabilities and stockholder's equity?
As it would be shown on a comparative balance sheet, what is the change in amount for total liabilities?
Six events relating to liabilities follow: a. Paid the liability for interest payable accrued at the end of the last accounting period. b. Made the current monthly payment on a 12-month installment...
Suppose you believe that the economy is just entering a recession. Your firm must raise capital immediately, and debt will be used. Should you borrow on a long-term or a short-term basis? Explain.
The total on the "schedule of accounts payable" at January 31 should equal: a. the sum of the accounts payable and notes payable controlling accounts totals at January 31. b. the total of the pur...
An installment note payable for a principal amount of $48,000 at 6% interest requires Lawson Company to repay the principal and interest in equal annual payments of $11,395 beginning December 31, 2...
Current liabilities are due: (a) but not receivable for more than one year. (b) but not payable for more than one year. (c) and receivable within one year. (d) and payable within one year.
A company has a $1,000,000 bond issue outstanding with unamortized premium of $10,000 and unamortized issuance cost of $5,300. What is the book value of its liability?
Canyon Realty Co. pays weekly salaries of $12,000 on Friday for a five-day week ending on that day. What is the adjustment at the end of the accounting period, assuming that the period ends on Tues...
How does the transfer of a liability to the corporation along with property affect the calculation of the basis of stock received by a shareholder in a section 351 transfer?
The translation (remeasurement) adjustment reported in a translation when the functional currency is not the foreign currency is included: a) as a separate component of other comprehensive income....
On Nov. 1, Carter Company signed a 120-day, 10% note payable with a face value of $9,000. What is the maturity value of the note on Mar. 1?
Roger is a 30% partner in the Roc Partnership. At the beginning of the tax year, Roger's basis in the partnership interest was $60,000, including his share of partnership liabilities. During the cu...
Francisco leased equipment from Julio on December 31, 2011. The lease is a 10-year lease with annual payments of $150,000 due on December 31 of each year. The present value of the lease is $1,020,0...
The most important information needed to determine if companies can pay their current obligations is the: - relationship between current assets and current liabilities - relationship between short-...
The first item listed under current liabilities is usually: - taxes payable - accounts payable - notes payable - salaries payable
Wages payable: A. current asset (CA). B. non-current asset (NCA). C. current liability (CL). D. non-current liability (NCL) E. shareholders' equity (SE) F. revenue (R) G. expense (E)
Would it always be a bad thing for liabilities to increase? What if borrowing money is cheaper than using up all your cash on a particular expenditure, for example? Explain.
Which of the following requirements do not have to be met in a Section 351 transaction? a) In the aggregate, the transferors of property to the corporation must collectively control the corporation...
If assets are $205,000 and owner's equity is $75,000, what is the amount of the liabilities?
For the following transaction, indicate its effect on the total current liabilities (increase, decrease, no effect): Payment is made to trade creditors for previous purchases. Assume an initial cur...
Southern Company's accountant failed to accrue as of 12/31/08 some employee fringe benefit program expenses that were incurred in 2008 and that will be paid in 2009. The result of this omission is...
Count Cash Co. pays a weekly payroll of $170,000 that includes federal taxes withheld of $25,400, FICA taxes withheld of $15,780, and 401(k) withholdings of $18,000. What is the effect of assets an...
When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for: a) the face value of the note. b) the face value of the note plus the interest t...
Liability for Post-retirement Benefits is classified as [{Blank}]. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current...
Janson Corporation Co.'s trial balance included the following account balances on December 31, 2011: Accounts Payable: $25,000 Bond payable, due 2020: $22,000 Salaries payable: $16,000 Note payable...
The claims of creditors against assets are: A) owners' equity. B) liabilities. C) expenses. D) revenues.
Long-term Notes Payable is classified as ______. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long Ter...
Bonus Payable is classified as _______. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long Term Liabili...
Short-Term Notes Payable is classified as _______. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long T...
Medicare Tax Payable is classified as _________. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long Ter...
Corporate Income Taxes Payable is classified as ________. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g....
Sales Taxes Payable is classified as _______. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long Term L...
Payroll Taxes Payable is classified as ________. a. Current Assets b. Long-Term Investments c. Land, Buildings and Equipment d. Intangible Assets e. Other Assets f. Current Liabilities g. Long Ter...
When you have something listed in the category of current liabilities, it is your intention to pay the obligation sometime within the next 12 months. However, if something is listed as a long-term...
There are situations wherein a company faces a potential liability, but is not certain of all of the details associated with such potential liabilities. What type of liabilities are these called? D...
At year-end 2016, Wallace Landscaping's total assets were $2.0 million, and its accounts payable were $330,000. Sales, which in 2016 were $2.2 million, are expected to increase by 30% in 2017. Tota...
The firm has 80 short-term commercial paper notes outstanding that have a face value of $1,000,000, and mature in 46 days. These are currently selling for 995,673.86. You are about to start to cons...
Notes payable. Which Statement will this account be found? a) Income Statement b) Statement of Retained Earnings c) Balance Sheet
Which of the following best describes a liability?
For Scenario #2, Determine the Carrying Value of the Note as of December 31, 2016. 1. On January 1, 2015, ABC rendered services to Z Corp. in exchange for a $105,000, 3-year note. The terms of the...
On January 1, Year 1, Entity A acquired a long-lived tangible asset for $400,000. On that date, it recognized a liability for an asset retirement obligation (ARO) of $120,000. The estimated useful...
Which of the following is least likely to be classified as a current liability? A. Wages payable B. Income taxes Payable C. Unemployment taxes payable D. Bonds payable
Which of the following statements is False? A. A liability is an item that involves a future transfer of resources. B. A liability is an item that is measurable in monetary items. C. A liability...
A contingent liability is: A) an unearned revenue B) a potential obligation, the existence or amount of which depends on a future event C) an amount owed to a state or local government D) an amount...
At the balance sheet date, a business owes a mortgage note payable of $350,000, the terms of which provide for the monthly payments of $7,000. Explain how the liability should be classified on the...
What is a current liability? What is a noncurrent liability? What is the difference between the two types of liabilities? In which financial statement would you find these liabilities? Can you h...
Robert is a manager of a small-scale firm. He needs to decide whether the firm has sufficient resources to meet its short-term obligations. Calculate the ratio that Robert needs to calculate from t...
At the balance sheet date, a business owes a five-year mortgage note payable of $480,000, the terms of which provide for monthly payments of $8,000. Explain how the liability should be classified o...
Calculate the company's income taxes. The Stefani Co. had $287,000 in taxable income. Use the rates from Table 2.3 below. Ca... The Stefani Co. had $287,000 in taxable income. Use the rates from Ta...
A company has a balance in its provision for long service leave account of $19,521 at the end of the year. During the year it recorded a long service leave expense of $704 and paid $680 for long se...
The adjusted trial balance for Otam Corp. at the end of the current year, 2014, contained the following accounts. 5-year Bonds Payable 8% $1,500,000 Interest Payable 50,000 Premium on Bonds Payable...
Explore the FASB codification section related to liabilities (405). Explain how specific liabilities might be treated, and justify why this methodogy is appropriate.
Smith Company has 200,000 shares authorized, 150,000 shares issued, and 25,000 shares of Treasury stock on January 1, 2011. On March 1, they declared and issued a 15% stock dividend. On April 1, th...
Consider the following account starting balances and transactions involving these accounts. Use T-accounts to record the starting balances and the offsetting entries for the transactions. The start...
What amount of liability should appear on the December 31, 2020 balance sheet?
The adjusted trial balance for Dolton Corporation at the end of the current year contained the following accounts: |Bonds payable 10% |\$400,000 |Bond interest payable| 20,000 |Discount on bonds...
Explain how contingent liabilities impact financial decisions. Give examples.
Compute the cash payments to suppliers.
If Assets have a balance of $50,000 and Stockholders' Equity has a balance of $40,000, then Liabilities must have a balance of: a. $90,000. b. $20,000. c. $40,000. d. $10,000.
Why is it important to properly classify liabilities? Discuss ways in which misclassification would impact the financial statements. Discuss ways in which misclassification would impact financial a...
Under the indirect method, increases in current liabilities are deducted from net income reported on the income statement in determining cash flows from operating activities. Is the statement true...
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? a. Trace a sample of accounts payable entries recorded just before year-end to the un...
Prepare the schedule using effective-interest method to amortize the bond premium or discount of Nance Co. Nance Co. receives $401,000 when it issues a $401,000, 6% mortgage note payable to finance...
N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets? a. $2,695,000 b. $1,255,000 c. $1,745,000 d. $3...
Liabilities are generally classified on a balance sheet as a. small liabilities and large liabilities. b. present liabilities and future liabilities. c. tangible liabilities and intangible liabilit...
Select the appropriate category for the following accounting liability: Salaries payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated...
Select the appropriate category for the following accounting liability: Purchase commitments a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estima...
Select the appropriate category for the following accounting liability: Notes payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated pay...
Select the appropriate category for the following accounting liability: Employment commitments a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but esti...
Select the appropriate category for the following accounting liability: Taxes payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated pay...
Select the appropriate category for the following accounting liability: Subscription fees received in advance a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment a...
Select the appropriate category for the following accounting liability: Bonds payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated pay...
Select the appropriate category for the following accounting liability: Warranties payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimate...
Select the appropriate category for the following accounting liability: Accounts payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated...
Select the appropriate category for the following accounting liability: Unsettled lawsuits where no estimate of loss can be made a. Obligations with fixed payment dates and amounts b. Obligations w...
Select the appropriate category for the following accounting liability: Interest Payable a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts but estimated...
Select the appropriate category for the following accounting liability: Rental fees received in advance a. Obligations with fixed payment dates and amounts b. Obligations with fixed payment amounts...
Current liabilities are expected to be settled or converted to other liabilities within? 1 - One year. 2 - One year or the operating cycle, whichever is longer. 3 - One year or the operating cycl...
J. Sharp invested $50,000 cash in the business during year 2012 (the December 31, 2011, credit balance of the J. Sharp, Capital account was $32,700). Sharp Construction is required to make a $ 6,60...
Sales Tax Payable is an asset account. a) True b) False
To be classified as a long-term liability: A. the obligation must be due within the coming year B. it must only be a financing activity C. it will not require the use of current assets within the c...
To be classified as a long-term liability: A. the obligation must be due within the coming year B. it must only be a financing activity C. it will not require the use of current assets within the...
The City of Bluefield had general obligation debt outstanding in the amount of $64,000,000 and had available resources of $12,000,000 to pay that debt. The assessed valuation of property in the cit...
How much of the Note Payable was paid off during July?
If the beginning balance in Note Payable was $20,000, what amount of Notes Payable did Fargo issue in July?
Epson Distributing leased a machine for a period of eight years, contracting to pay $200,000 at the beginning of the lease term on December 31, 2008, and $200,000 annually on December 31 for each o...
Which of the following situations would not be required to be recorded in the financial statements or reported as a note to the financial statements? a. The liability is remote and estimated to be...
Damien Co. has $10,000 of unearned revenues on its balance sheet. Damien expects that it will earn $8,000 of these revenues in the upcoming twelve months. How much will be recorded in Long-Term Lia...
Which of the following liabilities could be a multi-period known liability? (Check all that apply.) a. Unearned subscription revenues b. Wages payable c. Notes payable d. Accounts payable
A [{Blank}] is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.
A measurable obligation from agreements, contracts, or laws is called a [{Blank}] liability
Describe the Accounting for Contingent Liabilities and Analyze its Impact on the Balance Sheet and Income Statement. Give an example.
When canceling debt before its maturity, debt retirement, it is theorized that the recall of the debt is a current decision. For that reason any gains or losses arising from the debt retirement sho...
The Accounting Equation is used to develop the organizations financial reports. (1) Describe what liabilities are and (2) provide an example of a liability account.
Which of the following is not a current liability? a. Salaries and Wages Payable b. Accounts Payable c. Taxes Payable d. Bonds Payable
A company offers its employees a bonus equal to 3% of the company's annual net income. The company expects 2013 net income to be $175,000. The amount that should be credited to Employee Bonus Payab...
The maturity value of a note payable is calculated as: A) The principal of the note plus the accrued interest expense on the note. B) The face amount of the note plus the accrued interest expens...
What is a note that is not paid in full at maturity called? a. maker b. interest c. payee d. term e. dishonored note f. principal g. maturity value
What are the three main characteristics of liabilities? Is the requirement mean an absolute obligation or a probable obligation? What are some of the ratios that give us an idea of the current asse...
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