Question 1

Current liabilities are due:

Accepted Answer

A)   but not receivable for more than one year or the current operating cycle, whichever is longer.
B)   but not payable for more than one year or the current operating cycle, whichever is longer.
C)   and receivable within the current operating cycle or one year, whichever is longer.
D)   and payable within the current operating cycle or one year, whichever is longer.E) A) and B)
F) B) and D)

Question 2

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

Accepted Answer

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

Question 3

Some bonds allow the issuing company to retire the bond with cash at any time.These bonds are known as:

Accepted Answer

A)   convertible bonds.
B)   debenture bonds
C)   callable bonds.
D)   coupon bonds.E) None of the above
F) All of the above

Question 4

Acme Enterprises began the year owing its suppliers $3,000 for merchandise purchased last year.Acme then sold half of this merchandise for $5,000 on account.Two weeks later,Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account.Acme now has an Accounts Payable balance of:

Accepted Answer

A)   $11,000.
B)   $6,000.
C)   $1,000.
D)   $4,500.E) All of the above
F) C) and D)

Question 5

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term
1._____ Accrued liability
2._____ Loan covenant
3._____ Issue price
4._____ Face value
5._____ Line of credit
6._____ Public debt offering
7._____ Security
8._____ Contingent liability
9._____ Debt-to-assets ratio
Definition
A.Bond features that allow the issuer to repay the loan early.
B.A prearranged agreement that allows a company to borrow at will up to a limit.
C.This item is reported as a contra asset account.
D.The amount that the lender actually pays for a bond.
E.The cost of issuing a bond.
F.Debt features that,if violated,allow the lender to revise loan terms.
G.The total amount of money that a company owes in debt.
H.The amount a company must repay creditors when a bond matures.
I.These are liabilities that have been incurred during the period but not yet paid.
J.When a company borrows money by issuing bonds in the financial markets.
K.A bond feature that allows a creditor to seize assets if debt is not properly repaid.
L.This type of liability is uncertain; it exists only if some other condition occurs.
M.Total liabilities divided by total assets.

Accepted Answer

1.I
2.F
3....

Question 6

On December 1,2015,Newco borrowed $200,000 from First National Bank,and signed a 9% note payable due in one year.Interest on the note is due at maturity.
Required:
Part a.Prepare the journal entry to record the borrowing transaction.
Part b.Prepare the required adjusting entry on December 31,2015.
Part c.Prepare the journal entry to record the payment of the interest on December 1,2016.
Part d.Prepare the journal entry to record the payment of the note on December 1,2016.

Accepted Answer

Part a<br> <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> <br>...

Question 7

The Discounts on Bonds Payable account is classified as a(n) :

Accepted Answer

A)   assets.
B)   contra-liabilities.
C)   expenses.
D)   contra-assets.E) None of the above
F) B) and C)

Question 8

Which of the following statements about payroll is correct?

Accepted Answer

A)   Payroll deductions are an expense of the company.
B)   When recording the payroll, Salaries and Wages Expense equals the sum of all the deductions.
C)   The net pay is debited to Salaries and Wages Expense when the payroll is recorded.
D)   Gross earnings are computed by multiplying the time worked by the pay rate promised by the employer.E) All of the above
F) A) and B)

Question 9

Gross earnings for the pay period are $100,000.Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850.The journal entry to record wages paid includes a:

Accepted Answer

A)   $100,000 credit to Salaries and Wages Payable.
B)   $6,700 debit to FICA Payable.
C)   $100,000 debit to Salaries and Wages Expense.
D)   $70,000 debit to Salaries and Wages Expense.E) None of the above
F) A) and B)

Question 10

Use the information above to answer the following question.What is the issue price of these bonds?

Accepted Answer

A)   $300,000
B)   $285,000
C)   $315,000
D)   $330,000E) None of the above
F) All of the above

Question 11

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Accepted Answer

A)   $50,000.
B)   $52,000.
C)   $55,000.
D)   $57,000.E) A) and B)
F) None of the above

Question 12

Current liabilities could include all of the following except:

Accepted Answer

A)   an accounts payable due in 30 days.
B)   a notes payable due in 9 months.
C)   a bank loan due in 18 months.
D)   any part of long-term debt due during the current period.E) B) and D)
F) B) and C)

Question 13

Some bonds mature in installments.If a bond issue contains this feature,the bonds are known as:

Accepted Answer

A)   secured bonds.
B)   convertible bonds.
C)   callable bonds.
D)   serial bonds.E) B) and C)
F) A) and D)

Question 14

The net amount of a bond liability that appears on the balance sheet is equal to the face value of the bond plus any related discount or minus any related premium.

Accepted Answer

A) True 
 B)False

Question 15

Leanley Co.issues $100,000 of 10-year,10% bonds on January 1,2016.
Required:
Determine the amounts (bonds payable,unamortized premium or discount,and bonds payable,net)that will be reported on a balance sheet prepared as of the date of issuance of January 1,2016 under each of the following assumptions:
Part a.The bonds are sold at 100.
Part b.The bonds are sold at 104.
Part c.The bonds are sold at 98.

Accepted Answer

Parts a,b,and c

(...

Question 16

The following information was obtained from Quayle Company's income statement:

What is the times interest earned ratio?

Accepted Answer

A)   5.29
B)   8.13
C)   9.13
D)   1.73E) B) and D)
F) A) and C)

Question 17

On January 1,2016,a company issues 3-year bonds with a face value of $200,000 and a stated interest rate of 8%.Because the market interest rate is higher than the stated interest rate,the company receives $194,000 for the bond.
Required:
Fill in the table assuming the company uses the straight-line bond amortization.

Accepted Answer

The answer of On January 1,2016,a company issues 3-year bonds...

Question 18

Because interest rates have fallen,a company retires bonds which had been issued at their face value of $200,000.The company bought the bonds back at 97.The journal entry to record this retirement includes a debit of:

Accepted Answer

A)   $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash.
B)   $194,000 to Bonds Payable, a debit to Gain on Bond Retirement of $6,000, and a credit of $200,000 to Cash.
C)   $200,000 to Bonds Payable, a credit of $6,000 to Interest Expense, and a credit of $194,000 to Cash.
D)   $194,000 to Bonds Payable and a credit of $194,000 to Cash.E) None of the above
F) A) and B)

Question 19

For the employee,net pay is equal to gross earnings minus:

Accepted Answer

A)   Federal income tax withholdings
B)   payroll deductions
C)   Social Security withholdings
D)   medical insurance premiumsE) A) and B)
F) A) and C)

Question 20

Debentures are:

Accepted Answer

A)   unsecured bonds.
B)   secured bonds.
C)   serial bonds.
D)   callable bonds.E) A) and D)
F) B) and C)

Exam 10: Reporting and Interpreting Liabilities

Correct Answer
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Parts a,b,and c

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Correct Answer
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Part a

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Use the information above to answer the following question.What is the issue price of these bonds?

Correct Answer
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The following information was obtained from Quayle Company's income statement: What is the times interest earned ratio?

Correct Answer
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Current liabilities are due:

Correct Answer
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Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Correct Answer
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Correct Answer
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Correct Answer
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Debentures are:

Correct Answer
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Gross earnings for the pay period are $100,000.Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850.The journal entry to record wages paid includes a:

Correct Answer
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Current liabilities could include all of the following except:

Correct Answer
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For the employee,net pay is equal to gross earnings minus:

Correct Answer
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Some bonds mature in installments.If a bond issue contains this feature,the bonds are known as:

Correct Answer
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Because interest rates have fallen,a company retires bonds which had been issued at their face value of $200,000.The company bought the bonds back at 97.The journal entry to record this retirement includes a debit of:

Correct Answer
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Which of the following statements about payroll is correct?

Correct Answer
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Acme Enterprises began the year owing its suppliers $3,000 for merchandise purchased last year.Acme then sold half of this merchandise for $5,000 on account.Two weeks later,Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account.Acme now has an Accounts Payable balance of:

Correct Answer
verified

The net amount of a bond liability that appears on the balance sheet is equal to the face value of the bond plus any related discount or minus any related premium.

Correct Answer
verified

The Discounts on Bonds Payable account is classified as a(n) :

Correct Answer
verified

Some bonds allow the issuing company to retire the bond with cash at any time.These bonds are known as:

Correct Answer
verified

Correct Answer
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1.I
2.F
3....
View Answer

Exam 10: Reporting and Interpreting Liabilities

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Correct AnswerverifiedPart a ...View AnswerShow Answer

Use the information above to answer the following question.What is the issue price of these bonds?

Correct AnswerverifiedShow Answer

The following information was obtained from Quayle Company's income statement: What is the times interest earned ratio?

Correct AnswerverifiedShow Answer

Current liabilities are due:

Correct AnswerverifiedShow Answer

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Debentures are:

Correct AnswerverifiedShow Answer

Gross earnings for the pay period are $100,000.Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850.The journal entry to record wages paid includes a:

Correct AnswerverifiedShow Answer

Current liabilities could include all of the following except:

Correct AnswerverifiedShow Answer

For the employee,net pay is equal to gross earnings minus:

Correct AnswerverifiedShow Answer

Some bonds mature in installments.If a bond issue contains this feature,the bonds are known as:

Correct AnswerverifiedShow Answer

Because interest rates have fallen,a company retires bonds which had been issued at their face value of $200,000.The company bought the bonds back at 97.The journal entry to record this retirement includes a debit of:

Correct AnswerverifiedShow Answer

Which of the following statements about payroll is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The net amount of a bond liability that appears on the balance sheet is equal to the face value of the bond plus any related discount or minus any related premium.

Correct AnswerverifiedShow Answer

The Discounts on Bonds Payable account is classified as a(n) :

Correct AnswerverifiedShow Answer

Some bonds allow the issuing company to retire the bond with cash at any time.These bonds are known as:

Correct AnswerverifiedShow Answer

Correct Answerverified1.I2.F3....View AnswerShow Answer

Correct Answer
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Parts a,b,and c

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Part a

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1.I
2.F
3....
View Answer