Question 1

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

Accepted Answer

current liabilities.

Question 2

Which of the following do not apply to unearned revenues?

Accepted Answer

Amounts to be received in the future from customers for delivery of products or services in the current period

Question 3

A short-term note payable:

Accepted Answer

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.

Question 4

The employer should record deductions from employee pay as:

Accepted Answer

current liabilities.

Question 5

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accepted Answer

current earnings for the pay period and number of withholding allowances the employee claims.

Question 6

Debt guarantees are:

Accepted Answer

considered to be contingent liabilities.

Question 7

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Accepted Answer

long-term liabilities.

Question 8

When a company is obligated for sales taxes payable, it is reported as a(n):

Accepted Answer

current liability.

Question 9

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Accepted Answer

False

Question 10

A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

Accepted Answer

recognize warranty expense and liability in the year of the sale.

Question 11

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

Accepted Answer

interest.

Question 12

All of the following are employer payroll taxes except:

Accepted Answer

federal income tax equal to that withheld from employees.

Question 13

Which of the following is not true regarding the unemployment insurance program?

Accepted Answer

It requires withholding from the employee wages.

Question 14

All of the following statements related to recording warranty expense are true except:

Accepted Answer

warranty expense should be recorded in the period when the warranty service is performed.

Question 15

A contingent liability is:

Accepted Answer

a potential obligation that depends on a future event arising from a past transaction or event.

Question 16

Short-term notes payable:

Accepted Answer

can be issued in return for money borrowed from a bank.

Question 17

Gross pay is:

Accepted Answer

total compensation earned by an employee before any deductions.

Question 18

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

Accepted Answer

merit rating.

Question 19

Employee vacation benefits:

Accepted Answer

are estimated liabilities.

Question 20

Uncertainties such as natural disasters are:

Accepted Answer

not contingent liabilities because they are future events not arising from past transactions or events.

Question 21

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Accepted Answer

False

Question 22

All of the following statements regarding uncertainty in liabilities are true except:

Accepted Answer

a company only records liabilities when it knows whom to pay, when to pay, and how much to pay.

Question 23

All of the following are true of known liabilities except:

Accepted Answer

are potential obligations that depend on some future event occurring.

Question 24

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

True

Question 25

FICA taxes include:

Accepted Answer

social Security and Medicare taxes.

Question 26

In the accounting records of a defendant, lawsuits:

Accepted Answer

should be recorded if payment for damages is probable and the amount can be reasonably estimated.

Question 27

All of the following statements regarding long-term liabilities are true except:

Accepted Answer

liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities.

Question 28

Estimated liabilities commonly arise from all of the following except:

Accepted Answer

unearned revenues.

Question 29

Contingent liabilities are recorded or disclosed unless they are:

Accepted Answer

remote

Question 30

FUTA taxes are:

Accepted Answer

unemployment taxes.

Question 31

Contingent liabilities must be recorded if:

Accepted Answer

the future event is probable and the amount owed can be reasonably estimated.

Question 32

Amounts received in advance from customers for future products or services:

Accepted Answer

are liabilities.

Question 33

Accrued vacation benefits are a form of estimated liability for an employer.

Accepted Answer

True

A201 CH9 Conceptual Q & A

Unlock all answers in this set

Haven't found what you need?