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Exam 10: Current Liabilities and Fair Value Accounting

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Question 61

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Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30. The entry to record the September 10 transaction (amounts rounded) is:

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Question 62

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A contingent liability is recognized when any likelihood of loss exists and the amount can be reasonably estimated.

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Question 63

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All of the following are classified as definitely determinable liabilities except

Social security and Medicare taxes are borne entirely by the employer.

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Product warranties are an expense of the period in which the product must be repaired or replaced.

Which of the following most likely would be classified as a current liability?

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

When a business sells an item and collects a state sales tax on it, a current liability to the state arises.

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

The lower the interest rate, the lower the future value factor.

For notes payable whose interest is stated separately, the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.

A company receives $180 for a sale, of which $10 is for sales tax. The journal entry to record the sale is:

First City Bank computes interest semiannually. If the interest rate is currently 6 percent pa, the amount deposited today should be multiplied by which future value factor to calculate the amount that will accumulate by the end of 10 years?

The future value of an ordinary annuity table would not include the factor

If an accrued liability for salaries is not recorded, income for the following period will be overstated.

The most common examples of commitments are leases and purchase agreements.

Use this information to answer the following question. $\begin{array}{|c|c|c|}\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}\text { Future Value of Ordinary Annuity of } \$ 1 \\\text { at } 12 \text { Percent }\end{array} \\\hline 1 & 1.120 & 1.000 \\\hline 2 & 1.254 & 2.120 \\\hline 3 & 1.405 & 3.374 \\\hline\end{array}$ A single deposit of $3,500 made at the beginning of period 1 would grow to how much at the end of three years?

Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest. The future value table is used by multiplying the $700 by which factor?

Meggie's Fitness Center received $720 from a customer in advance for one year membership in the fitness center. The entry that would be made to record the fee receipt is: