Question 1

Both partnerships and corporations calculate an income tax liability based on their taxable incomes, but proprietorships do not.

Accepted Answer

A) True 
 B)False

Question 2

Accounts payable:

Accepted Answer

A)   Are amounts owed to suppliers for products and services purchased on credit.
B)   Have specific due dates.
C)   Are estimated liabilities.
D)   Are long-term liabilities.
E)   All of these answers are correct.F) D) and E)
G) A) and B)

Question 3

A company's obligations not expected to be paid within the longer of one year of the balance sheet date or the next operating cycle are reported as current liabilities.

Accepted Answer

A) True 
 B)False

Question 4

MiniCompany borrowed $6,000 by signing an 8% interest-bearing 45-day note payable in exchange for an overdue accounts payable. To record this transaction, MiniCompany should prepare a journal entry that includes a:

Accepted Answer

A)   Credit to Accounts Payable for $6,000.
B)   Debit to Cash for $6,000.
C)   Credit to Notes Payable for $6,000.
D)   Debit to Cash for $6,300.
E)   Debit to Notes Payable for $6,000.F) B) and D)
G) None of the above

Question 5

Obligations due to be paid within one year or the company's operating cycle, whichever is longer, are:

Accepted Answer

A)   Non current liabilities.
B)   Revenues.
C)   Operating cycle liabilities.
D)   Current assets.
E)   Current liabilities.F) A) and D)
G) A) and C)

Question 6

Provincial Sales Tax Payable is a tax levied on sales to all final consumers of taxable products.

Accepted Answer

A) True 
 B)False

Question 7

Liabilities:

Accepted Answer

A)   Must have a known payee.
B)   Must have a date for payment.
C)   Must be certain.
D)   Can be reliably estimated.
E)   Must be for a specific amount.F) C) and D)
G) A) and B)

Question 8

The accounting for a contingent liability is the same as for a provision.

Accepted Answer

A) True 
 B)False

Question 9

Goods and Services Tax GST) is not paid by a wholesaler.

Accepted Answer

A) True 
 B)False

Question 10

Promissory notes:

Accepted Answer

A)   Can be transferred from party to party by endorsement.
B)   Are due on a specific date.
C)   Can be current or non-current.
D)   Are negotiable.
E)   All of these answers are correct.F) A) and B)
G) A) and C)

Question 11

Provisions must be recorded if:

Accepted Answer

A)   The future event is unlikely, but the amount can be reliably estimated.
B)   The future event is probable and the amount can be reliably estimated.
C)   The future event is probable, but the amount cannot be estimated.
D)   The future event is unlikely.
E)   All of these answers are correct.F) A) and D)
G) All of the above

Question 12

Which of the following is created by the adjusting entry to recognize interest expense incurred but not yet paid?

Accepted Answer

A)   Notes payable.
B)   Unearned revenue.
C)   Interest expense.
D)   Interest revenue.
E)   Prepaid interest.F) B) and C)
G) A) and B)

Question 13

Discuss the types of estimated liabilities.

Accepted Answer

Estimated liabilities are known obligati...

Question 14

Contingent assets should be recognized as soon as they are probable and can be reliably estimated.

Accepted Answer

A) True 
 B)False

Question 15

The characteristics of a liability include:

Accepted Answer

A)   Requirement of future payment of assets or rendering of services.
B)   A liability can be current or noncurrent.
C)   Occurrence of a past transaction or event.
D)   Existence of a present obligation.
E)   All of these answers are correct.F) A) and B)
G) A) and C)

Question 16

The employer should record payroll deductions as:

Accepted Answer

A)   Employee receivables.
B)   Current liabilities.
C)   Wages payable.
D)   Employee payables.
E)   Payroll taxes expense.F) B) and D)
G) A) and E)

Question 17

Known liabilities are agreements, contracts, or laws that are measurable and have little uncertainty.

Accepted Answer

A) True 
 B)False

Question 18

Kirland performed warranty repair work for a customer which cost $800. The journal entry to record the work should be a debit of $800 to Warranty Expense and a $800credit to Estimated Warranty Liability.

Accepted Answer

A) True 
 B)False

Question 19

The difference between the amount received from a note payable and the amount repaid is:

Accepted Answer

A)   Premium.
B)   Interest.
C)   Face value.
D)   Discount.
E)   Principal.F) A) and B)
G) D) and E)

Question 20

Fees accepted in advance from a client:

Accepted Answer

A)   Are recorded as earned revenues on the income statement.
B)   Are recorded as liabilities.
C)   Do not increase assets.
D)   Increase income.
E)   None of these answers is correct.F) A) and C)
G) A) and E)

Exam 10: Current Liabilities

The employer should record payroll deductions as:

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Contingent assets should be recognized as soon as they are probable and can be reliably estimated.

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Known liabilities are agreements, contracts, or laws that are measurable and have little uncertainty.

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The difference between the amount received from a note payable and the amount repaid is:

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A company's obligations not expected to be paid within the longer of one year of the balance sheet date or the next operating cycle are reported as current liabilities.

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Discuss the types of estimated liabilities.

Correct AnswerverifiedEstimated liabilities are known obligati...View AnswerShow Answer

Fees accepted in advance from a client:

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Liabilities:

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Goods and Services Tax GST) is not paid by a wholesaler.

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Promissory notes:

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The characteristics of a liability include:

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Kirland performed warranty repair work for a customer which cost $800. The journal entry to record the work should be a debit of $800 to Warranty Expense and a $800credit to Estimated Warranty Liability.

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Which of the following is created by the adjusting entry to recognize interest expense incurred but not yet paid?

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The accounting for a contingent liability is the same as for a provision.

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Provincial Sales Tax Payable is a tax levied on sales to all final consumers of taxable products.

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MiniCompany borrowed $6,000 by signing an 8% interest-bearing 45-day note payable in exchange for an overdue accounts payable. To record this transaction, MiniCompany should prepare a journal entry that includes a:

Correct AnswerverifiedShow Answer

Both partnerships and corporations calculate an income tax liability based on their taxable incomes, but proprietorships do not.

Correct AnswerverifiedShow Answer

Accounts payable:

Correct AnswerverifiedShow Answer

Obligations due to be paid within one year or the company's operating cycle, whichever is longer, are:

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Provisions must be recorded if:

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Estimated liabilities are known obligati...
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