Question 1

Which of the following liabilities is often referred to as "free debt" because it rarely carries any interest if paid within a specified period of time?

Accepted Answer

A)   line of credit
B)   working capital loan
C)   accounts payable
D)   None of the above-all current liabilities carry an interest rate.E) B) and C)
F) None of the above

Question 2

The awarding of frequent flyer miles by airline companies is accounted for in a manner similar to

Accepted Answer

A)   warranty expenses.
B)   accounts payable.
C)   contingent liabilities.
D)   commitments.E) A) and B)
F) C) and D)

Question 3

Which of the following companies would usually NOT have an unearned revenue account?

Accepted Answer

A)   magazine publishing company
B)   property management company
C)   airline
D)   hardware storeE) C) and D)
F) B) and C)

Question 4

A line of credit helps a company deal with temporary cash shortages.

Accepted Answer

A) True 
 B)False  True

Question 5

For which of the following reasons would a user examine the current liabilities?

Accepted Answer

A)   to determine how quickly accounts receivable are collected
B)   to determine how much cash will be required to meet obligations in the short-term
C)   to determine how much cash will be required to meet obligations in the long-term
D)   to evaluate company performanceE) A) and B)
F) C) and D)

Question 6

All current liabilities have fixed due dates and fixed payment amounts.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a characteristic of a liability?

Accepted Answer

A)   There is a probable future sacrifice of resources.
B)   There is a fixed payment amount and payment date.
C)   There is little discretion to avoid the obligation.
D)   The event giving rise to the liability has already occurred.E) None of the above
F) B) and C)

Question 8

A company has $5,000,000 in long-term debt outstanding. They expect to repay it evenly over the next four years. Which of the following represents how it will be shown on the year-end balance sheet?

Accepted Answer

A)   Accounts Payable: $1,250,000, Long-Term Debt: $3,750,000
B)   Current Portion of Long-Term Debt: $1,250,000, Long-Term Debt: $3,750,000
C)   Current Portion of Long-Term Debt: $2,500,000, Long-Term Debt: $2,500,000
D)   Long-Term Debt: $5,000,000E) A) and C)
F) A) and D) B

Question 9

Use the following information for questions 40-42.
Melman Microscopes Inc. offers a two-year warranty against failure of its products. The estimated liability is 1.5% in the year of sale and 3% in the second year. Sales and actual warranty expense for 2016 and 2017 were: 
-The warranty expense for 2017 was

Accepted Answer

A)   $157,500.
B)   $175,500.
C)   $195,000.
D)   $305,000.E) A) and C)
F) B) and C)

Question 10

The difference between the face value of a liability and its present value is due to the time value of money.

Accepted Answer

A) True 
 B)False  True

Question 11

The accounts payable turnover ratio measures

Accepted Answer

A)   number of times the company settles its trade payable.
B)   average accounts payable balance.
C)   the average number of times the industry settles their trade payable.
D)   the average balance of accounts payable to current assets.E) A) and D)
F) None of the above

Question 12

Maynard Manufacturing has a two-week payroll of $8,200 for its eight employees. Income tax of $1,080 is deducted from the employees' cheques, as well as 4.95% for CPP and 1.88% for EI. Wages deposited in employees' bank accounts would be

Accepted Answer

A)   $6,560.
B)   $7,120.
C)   $7,640.
D)   $8,200.E) B) and C)
F) A) and C)

Question 13

Lokus Lofts is a rental company that requires its tenants to pay rent one month in advance. Lokus should record the cash received as

Accepted Answer

A)   Prepaid Rent.
B)   Rent Revenue.
C)   Unearned Revenue.
D)   Accounts Payable.E) All of the above
F) None of the above

Question 14

When the board declares dividends, the correct journal will be

Accepted Answer

A)   Dividends Expense Dividends Payable
B)   Dividend Declared Cash
C)   Dividends Declared Dividends Payable
D)   Dividends Receivable Dividends RevenueE) All of the above
F) A) and D)

Question 15

Typically acquisition costs for inventory can be financed through the use of

Accepted Answer

A)   overdraft protection.
B)   accounts payable.
C)   working capital.
D)   notes payable.E) C) and D)
F) None of the above

Question 16

Accounting standards require that liabilities be recorded at their present value.

Accepted Answer

A) True 
 B)False

Question 17

Bankers will often compare current assets to current liabilities to assess viability.

Accepted Answer

A) True 
 B)False

Question 18

During 2017 Albany Appliances sold 400 appliances worth $2,000,000. Each appliance comes with a one-year warranty, which Albany estimates will cost $75 each. During the year Albany spent $12,500 on warranty costs for the appliances sold in 2017. At the end of the 2017 the warranty liability and the warranty expense related to these sales would be closest to

Accepted Answer

The answer of During 2017 Albany Appliances sold 400 appliances...

Question 19

Which of the following liabilities results from amounts owed by BOTH the employee and the employer?

Accepted Answer

A)   employee income tax payable
B)   wages payable
C)   employment insurance payable
D)   vacation pay payableE) All of the above
F) A) and B)

Question 20

All of the following are ways that corporations can finance current cash shortages EXCEPT a

Accepted Answer

A)   line of credit.
B)   current portion of long-term debt.
C)   short-term loan.
D)   working capital loan.E) A) and B)
F) None of the above

Exam 9: Long-Term Assets

Which of the following liabilities is often referred to as "free debt" because it rarely carries any interest if paid within a specified period of time?

Correct Answer
verified

The awarding of frequent flyer miles by airline companies is accounted for in a manner similar to

Correct Answer
verified

Which of the following companies would usually NOT have an unearned revenue account?

Correct Answer
verified

A line of credit helps a company deal with temporary cash shortages.

Correct Answer
verified
True

For which of the following reasons would a user examine the current liabilities?

Correct Answer
verified

All current liabilities have fixed due dates and fixed payment amounts.

Correct Answer
verified

Which of the following is NOT a characteristic of a liability?

Correct Answer
verified

A company has $5,000,000 in long-term debt outstanding. They expect to repay it evenly over the next four years. Which of the following represents how it will be shown on the year-end balance sheet?

Correct Answer
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B

Correct Answer
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The difference between the face value of a liability and its present value is due to the time value of money.

Correct Answer
verified
True

The accounts payable turnover ratio measures

Correct Answer
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Maynard Manufacturing has a two-week payroll of $8,200 for its eight employees. Income tax of $1,080 is deducted from the employees' cheques, as well as 4.95% for CPP and 1.88% for EI. Wages deposited in employees' bank accounts would be

Correct Answer
verified

Lokus Lofts is a rental company that requires its tenants to pay rent one month in advance. Lokus should record the cash received as

Correct Answer
verified

When the board declares dividends, the correct journal will be

Correct Answer
verified

Typically acquisition costs for inventory can be financed through the use of

Correct Answer
verified

Accounting standards require that liabilities be recorded at their present value.

Correct Answer
verified

Bankers will often compare current assets to current liabilities to assess viability.

Correct Answer
verified

Correct Answer
verified

Which of the following liabilities results from amounts owed by BOTH the employee and the employer?

Correct Answer
verified

All of the following are ways that corporations can finance current cash shortages EXCEPT a

Correct Answer
verified

Exam 9: Long-Term Assets

Which of the following liabilities is often referred to as "free debt" because it rarely carries any interest if paid within a specified period of time?

Correct AnswerverifiedShow Answer

The awarding of frequent flyer miles by airline companies is accounted for in a manner similar to

Correct AnswerverifiedShow Answer

Which of the following companies would usually NOT have an unearned revenue account?

Correct AnswerverifiedShow Answer

A line of credit helps a company deal with temporary cash shortages.

Correct AnswerverifiedTrue

For which of the following reasons would a user examine the current liabilities?

Correct AnswerverifiedShow Answer

All current liabilities have fixed due dates and fixed payment amounts.

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of a liability?

Correct AnswerverifiedShow Answer

A company has $5,000,000 in long-term debt outstanding. They expect to repay it evenly over the next four years. Which of the following represents how it will be shown on the year-end balance sheet?

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

The difference between the face value of a liability and its present value is due to the time value of money.

Correct AnswerverifiedTrue

The accounts payable turnover ratio measures

Correct AnswerverifiedShow Answer

Maynard Manufacturing has a two-week payroll of $8,200 for its eight employees. Income tax of $1,080 is deducted from the employees' cheques, as well as 4.95% for CPP and 1.88% for EI. Wages deposited in employees' bank accounts would be

Correct AnswerverifiedShow Answer

Lokus Lofts is a rental company that requires its tenants to pay rent one month in advance. Lokus should record the cash received as

Correct AnswerverifiedShow Answer

When the board declares dividends, the correct journal will be

Correct AnswerverifiedShow Answer

Typically acquisition costs for inventory can be financed through the use of

Correct AnswerverifiedShow Answer

Accounting standards require that liabilities be recorded at their present value.

Correct AnswerverifiedShow Answer

Bankers will often compare current assets to current liabilities to assess viability.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following liabilities results from amounts owed by BOTH the employee and the employer?

Correct AnswerverifiedShow Answer

All of the following are ways that corporations can finance current cash shortages EXCEPT a

Correct AnswerverifiedShow Answer

Correct Answer
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True

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B

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True

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