Deck 13: Non-Financial Andcurrent Liabilities

Question 1

Accumulating rights to benefits (for employees)

A)are rarely mandated by provincial labour law.
B)include vested rights that do not depend on the employee's continued service.
C)are rights that do not accrue with employee service.
D)are not accrued as an expense in the period earned.

Answer 1

B

Question 2

A constructive obligation arises when

A)the entity is legally obligated to honour the obligation.
B)the entity makes an unconditional promise to pay money in the future.
C)past or present company practice reveals the entity acknowledges a potential economic burden.
D)the entity has a conditional obligation which becomes unconditional if an uncertain future event occurs.

Answer 2

C

Question 3

Regarding zero-interest-bearing notes,

A)they do not have an interest component.
B)the debtor receives the future value of the note and pays back the present value.
C)any interest is never recognized until the note is repaid.
D)the debtor receives the present value of the note and pays back the future value.

Answer 3

D

Question 4

Under IFRS, even if the entity plans to refinance long-term debt, the current portion must be reported as a current liability UNLESS

A)long-term financing has been completed after the statement of financial position date, but before the financial statements are released.
B)management intends to refinance the debt on a long-term basis.
C)at statement of financial position date, the entity expects to refinance under an existing agreement for at least a year, and the decision is solely at its discretion.
D)management intends to discharge the debt by issuing shares.

Question 5

Which of the following is a current liability?

A)preferred dividends in arrears
B)stock dividends distributable
C)preferred cash dividends payable
D)stock splits

Question 6

Goods and Services Tax (GST)

A)is a value added tax.
B)is a sales tax charged by each province on all taxable goods.
C)in some provinces, is an income tax.
D)must be collected by all businesses in Canada.

Question 7

Regarding Provincial Sales Tax (PST),

A)the purchaser includes any PST paid in the cost of the goods or services.
B)all PST paid is recorded in a "PST Expense" account.
C)all PST paid is recorded in a "PST Recoverable" account.
D)for statement of financial position presentation, a PST registrant "nets" any PST paid against any PST collected from customers.

Question 8

Which of the following is generally associated with current liabilities classified as accounts payable?

Question 9

Among Oslo Corp.'s short-term obligations, on its most recent statement of financial position date, are notes payable totalling $250,000 with the Provincial Bank.These are 90-day notes, renewable for another 90-day period.These notes should be classified on Oslo's statement of financial position as

A)current liabilities.
B)deferred charges.
C)long-term liabilities.
D)shareholders' equity.

Question 10

Corporation income taxes payable

A)must always be approved by an external auditor.
B)are reviewed and approved by Canada Revenue Agency (CRA).
C)also apply to proprietorships and partnerships.
D)are always the same under GAAP and Canadian tax laws.

Question 11

Which of the following should NOT be included in the current liabilities section of the statement of financial position?

A)trade accounts payable
B)current portion of long-term debt to be retired by non-current assets
C)short-term zero-interest-bearing notes payable
D)a liability due on demand (callable debt)

Question 12

Which of the following statements is NOT true about recognition and subsequent accounting for financial liabilities?

A)They are initially recognized at their fair value.
B)After acquisition, they continue to be accounted for at fair value.
C)After acquisition, they are generally accounted for at amortized cost.
D)Short-term liabilities, such as accounts payable, are usually recorded at their maturity value.

Question 13

According to the existing IFRS and the CICA Handbook Part II guidelines, which of the following is NOT an essential characteristic of a liability?

A)It embodies a duty or responsibility.
B)The transaction or event that obliges the entity has occurred.
C)The obligation is enforceable on the other party.
D)The entity has little or no discretion to avoid the duty.

Question 14

Accounting for GST includes

A)crediting GST Payable to record GST paid on inventory for resale.
B)crediting GST Receivable to record GST collected from customers.
C)debiting GST Receivable to record GST paid to suppliers.
D)debiting GST Payable to record GST collected from customers.

Question 15

Non-accumulating rights to benefits, such as parental leave, are generally accounted for by

A)the full accrual method.
B)the event accrual method.
C)the cash method.
D)financial statement note disclosure only.

Question 16

Stock dividends distributable should be classified on the

A)income statement as an expense.
B)statement of financial position as an asset.
C)statement of financial position as a liability.
D)statement of financial position as an item of shareholders' equity.

Question 17

A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should

A)be accrued during the period when the compensated time is expected to be used by employees.
B)be accrued during the period following vesting.
C)be accrued during the period when earned.
D)not be accrued unless a written contractual obligation exists.

Question 18

Which of the following are included in the employer's "Payroll Tax Expense"?

A)employee income tax deducted, employer portion of CPP/QPP and EI
B)employer portion of CPP/QPP and EI, union dues
C)employer portion of CPP/QPP and EI only
D)employer portion of EI, union dues, and employee income tax deducted

Question 19

Which of the following statements is FALSE?

A)Under IFRS, a company may exclude a short-term obligation from current liabilities if, at statement of financial position date, the entity expects to refinance under an existing agreement for at least a year, and the decision is solely at its discretion.
B)Cash dividends should be recorded as a liability when they are declared by the board of directors.
C)Under the cash basis method, warranty costs are charged to expense as they are paid.
D)Federal income taxes withheld from employees' payroll cheques should be recorded as a long-term liability.

Question 20

Which of the following may be classified as a current liability?

A)stock dividends distributable
B)accounts receivable credit balances
C)losses expected to be incurred within the next twelve months in excess of the company's insurance coverage
D)tenant's rent deposit not returnable until the end of a long-term lease

Question 21

Harriet Ltd.has a likely loss that can only be reasonably estimated within a range of outcomes.No single amount within the range is a better estimate than any other amount.Under ASPE, the loss accrual should be

A)zero.
B)the maximum of the range.
C)the mean of the range.
D)the minimum of the range.

Question 22

The denominator of the days payable outstanding ratio can be

A)average daily sales.
B)average trade accounts payable.
C)average daily cost of goods sold.
D)average trade accounts receivable.

Question 23

According to the Exposure Draft of Proposed Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets,

A)only conditional obligations are recorded.
B)liabilities must have measurement certainty.
C)the term "contingent liabilities" is eliminated.
D)a conditional obligation related to an unconditional obligation is not recognized.

Question 24

Under ASPE, a contingent liability is recognized if

A)it is certain that funds are available to settle the contingency.
B)an asset may have been impaired.
C)the amount of the loss can be reasonably estimated and it is likely that an asset has been impaired or a liability incurred as of the financial statement date.
D)it is likely that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated.

Question 25

Using the revenue approach of accounting for product guarantees and warranty obligations

A)the liability is measured at the estimated cost of meeting the obligation.
B)there is no effect on future income.
C)the liability is measured at the value of the services to be provided.
D)the liability is measured at the value of the services to be provided, but there is no effect on future income.

Question 26

At the time of recognition of an asset retirement obligation, the present value should be

A)recorded as a separate long-term asset and as an asset retirement obligation.
B)expensed and recorded as an asset retirement obligation.
C)expensed to "Asset Retirement Expense" in the period actually paid.
D)added to the related asset cost and recorded as an asset retirement obligation.

Question 27

Which of the following is generally NOT used as a basis for calculating bonuses or profit-sharing amounts?

A)a percentage of the employees' regular pay rates
B)the company's pre-tax income
C)productivity increases
D)gross sales

Question 28

According to the IASB current proposed definition, which of the following is NOT an essential characteristic of a liability?

A)It exists in the present time.
B)There is certainty about the amount of future outflows.
C)The obligation is enforceable on the obligor entity.
D)It represents an economic burden or obligation.

Question 29

On December 1, 2017, Corby Ltd.borrowed $270,000 from their bank, by signing a four-month, 7% interest-bearing note.Assuming Corby has a December 31 year end and does NOT use reversing entries, the journal entry to record payment of this note on April 1, 2018 will include a

A)credit to Note Payable of $270,000.
B)debit to Interest Expense of $6,300.
C)debit to Interest Payable of $4,725.
D)debit to Interest Payable of $1,575.

Question 30

Which of the following may NOT be accrued as a contingent liability?

A)threat of expropriation of assets
B)pending or threatened litigation
C)guarantees of indebtedness of other
D)potential income tax refunds

Question 31

On November 1, 2017, Best Corp.signed a three-month, zero-interest-bearing note for the purchase of $80,000 of inventory.The maturity value of the note was $81,200, based on the bank's discount rate of 6%.The adjusting entry prepared on December 31, 2017 in connection with this note will include a

A)debit to Note Payable for $800.
B)credit to Note Payable for $800.
C)debit to Interest Expense for $1,200.
D)credit to Interest Expense for $800.

Question 32

The current (commonly used)accounting treatment for premiums and coupons requires that the costs should

A)be recorded at the maximum possible redemption cost in the year of the related sales.
B)be recorded at the total estimated redemption cost in the year of the related sales.
C)be recorded in the year(s)that the redemption is expected to occur.
D)not be recorded at all.

Question 33

Which of the following commitments would NOT require disclosure in the financial statement notes?

A)major property, plant and equipment expenditures
B)payments under non-cancellable operating leases
C)large purchases of materials in the normal course of business
D)commitments involving significant risk

Question 34

Which of the following statements is INCORRECT concerning warranties?

A)Using the expense approach, the warranty is provided with the product or service with no additional fee.
B)Where warranty costs are immaterial or when the warranty period is quite short, the warranty costs may be accounted for using the cash basis.
C)Using the revenue approach, the warranty is a separate deliverable from the related product or service.
D)The revenue approach must be used for income tax purposes.

Question 35

Under IFRS, a provision is

A)a special fund set aside to pay long-term debt.
B)unearned revenue.
C)a liability of uncertain timing or amount.
D)an allowance for future dividends to be paid.

Question 36

Under current IFRS requirements, a provision is recognized if

A)the amount of the loss can be reliably measured and it is probable that an asset has been impaired or a liability incurred as of the financial statement date.
B)the amount of the loss cannot be measured reliably but it is probable that an asset has been impaired or a liability incurred as of the financial statement date.
C)it relates to a lawsuit commenced after the statement of financial position date, the outcome of which can be reliably measured.
D)it relates to an asset recognized as impaired after the statement of financial position date.

Question 37

The numerator of the acid-test ratio consists of

A)total current assets.
B)cash and marketable securities.
C)cash and net receivables.
D)cash, marketable securities, and net receivables.

Question 38

Which of the following statements is INCORRECT regarding the recording of the related increase or accretion in the carrying amount of an asset retirement obligation (ARO)?

A)Under ASPE, it is recognized as interest expense.
B)Under ASPE, it is recognized as an operating expense (but not as interest expense).
C)Under IFRS, it is recognized as a borrowing cost.
D)The amount should be calculated using the same discount (interest rate)as was used to calculate the initial present value of the ARO.

Question 39

What are the current International Financial Reporting Standards regarding customer loyalty programs (such as frequent flyer points)?

A)They are recognized only in the financial statement notes.
B)They are recognized only when customers redeem their points.
C)They are not explicitly addressed.
D)The current proceeds are to be split between the original transaction and the award credits (as unearned revenue).

Question 40

Under ASPE, an asset retirement obligation should be recognized when

A)an asset is impaired and is available for sale.
B)operation of an asset has resulted in an additional obligation such as the cost of cleaning up an oil spill.
C)there is a legal obligation to restore the site of the asset at the end of its useful life.
D)the company has an obligation to purchase a long-lived asset.

Question 41

On Dec 12, 2017, Ivory Coast, CGA, received $5,000 from a customer as an advance payment for accounting work to be done.The payment was credited to Accounting Revenue.Thirty percent of the work was performed in December 2017, with the rest to be done in January 2018, at which time the customer will be billed.The required adjusting entry at December 31, 2017 (year end)is

A)Dr.Unearned Revenue $1,500, Cr.Accounting Revenue $1,500.
B)Dr.Accounting Revenue $1,500, Cr.Unearned Revenue $1,500.
C)Dr.Accounting Revenue $3,500, Cr.Unearned Revenue $3,500.
D)Dr.Unearned Revenue $3,500, Cr.Accounting Revenue $3,500.

Question 42

Aluminum Ltd.has made a total of $23,250 in instalments for corporate income tax for calendar 2017, all of which have been debited to Current Income Tax Expense.At year end, Dec 31, 2017, the accountant has calculated that the corporation's actual tax liability is only $21,500.What is the correct adjusting entry to reflect this fact?

A)Dr.Current Income Tax Expense $1,750, Cr.Income Taxes Payable $1,750
B)Dr.Income Taxes Payable, $1,750, Cr.Current Income Tax Expense $1,750
C)Dr.Income Taxes Receivable $1,750, Cr.Current Income Tax Expense $1,750
D)Dr.Current Income Tax Expense $21,500, Cr.Income Taxes Payable $21,500

Question 43

On February 10, 2017, after issuance of its financial statements for calendar 2016, Diogenes Corp.entered into a financing agreement with Gigantic Bank, allowing Diogenes Corp.to borrow up to $6,000,000 at any time through 2019.Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of the loan.Diogenes presently has $2,250,000 of notes payable with Provincial Bank maturing March 15, 2018.The company intends to borrow $3,750,000 under the agreement with Gigantic and pay off the notes payable to Provincial.The agreement with Gigantic also requires Diogenes to maintain a working capital level of $9,000,000 and prohibits the payment of dividends on common shares without prior approval by Gigantic.From the above information only, the total short-term debt of Diogenes Corp.on the December 31, 2016 statement of financial position is

A)$0.
B)$2,250,000.
C)$3,000,000.
D)$6,000,000.

Question 44

Information regarding Oxygen Inc.'s payroll for the period ending March 22 follows: Assume 100% of the gross salaries and wages are subject to CPP and EI.Therefore, the NET pay for this period is

A)$66,690.
B)$67,420.
C)$68,220.
D)$72,420.

Question 45

Use the following information for questions.
Silver Ltd.has 35 employees who work 8-hour days and are paid hourly.On January 1, 2017, the company began a program of granting its employees 10 days paid vacation each year.Vacation days earned in 2017 may be taken starting on January 1, 2018.Information relative to these employees is as follows: Silver has chosen to accrue the liability for compensated absences (vacation pay)at the current rates of pay in effect when the vacation pay is earned.
What is the amount of the Vacation Wages Payable that should be reported at December 31, 2019?

A)$39,900
B)$45,360
C)$47,460
D)$47,880

Question 46

On December 31, 2017, Street Ltd.has $2,000,000 in short-term notes payable due on February 14, 2018.On January 10, 2018, Street arranged a line of credit with Regal Bank, which allows Street to borrow up to $1,500,000 at 1% above the prime rate for three years.On February 2, 2018, Street borrowed $1,200,000 from Regal Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable.Assuming Street adheres to IFRS, the amount of the short-term notes payable that should be reported as current liabilities on Street's December 31, 2017 statement of financial position (to be issued on March 5, 2018)is

A)$0.
B)$300,000.
C)$1,200,000.
D)$2,000,000.

Question 47

Included in Harrison Inc.'s account balances at December 31, 2017, were the following: Harrison's December 31, 2017 financial statements were to be issued on March 31, 2018.On January 15, 2018, the entire $600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2018.In addition, on March 10, 2018, Harrison made arrangements to refinance the 4% note on a long-term basis.Under IFRS, on the December 31, 2017 statement of financial position, the amount of the notes payable that Harrison should classify as current liabilities is

A)$0.
B)$100,000.
C)$250,000.
D)$350,000.

Question 48

Jordan Corp.operates in Ontario, selling a variety of goods.For most of these goods, Jordan must charge 13% HST, for some they only have to charge 5% HST; while a very few are tax exempt.During June of this year, the company reported sales of $200,000, on which 70% were charged 13% HST, 25% were charged only 5% HST, and the rest were tax exempt sales.The total amount of HST collected in June was

A)$10,000.
B)$18,200.
C)$20,700.
D)$26,000.

Question 49

Use the following information for questions.
Antimony Inc.developed a new gold mine during 2017, and is required by provincial law to restore the site to its previous condition once mining operations are completed.The company estimates that the mine will close in 20 years and that the land restoration will cost $5,000,000.Antimony uses a 6% discount rate.
To the nearest dollar, the adjusting entry to record accretion at the end of Year One is

Question 50

On January 1, 2017, Wick Ltd.leased a building to Candle Corp.for a ten-year term at an annual rental of $90,000.At the inception of the lease, Wick received $360,000 covering the first two years rent of $180,000 and a security deposit of $180,000.This deposit will NOT be returned to Candle upon expiration of the lease but will be applied to payment of rent for the last two years of the lease.What portion of the $360,000 should be shown as a current and long-term liability, respectively, in Wick's December 31, 2017 statement of financial position?

Question 51

Ye Olde Shoppe operates in a province with a 6% PST.The store must also collect 5% GST on all sales.For the month of May, Ye Olde Shoppe sold $90,000 worth of goods to customers, 60% of which were cash sales and the balance being on account.Based on the above information, what is the total debit to accounts receivable for the month of May?

A)$59,940
B)$39,960
C)$37,800
D)$36,000

Question 52

Browning Company's salaried employees are paid biweekly.Information relating to salaries for the calendar year 2017 is as follows: At December 31, 2017, what amount should Browning report for accrued salaries payable?

A)$126,000
B)$120,000
C)$91,000
D)$35,000

Question 53

The total payroll of Carbon Company for the month of October was $240,000, all subject to CPP deductions of 4.95% and EI deductions of 1.83%.As well, $60,000 in federal income taxes and $6,000 of union dues were withheld.The employer matches the employee deductions and contributes 1.4 times the employee EI deductions.What amount should Carbon record as employer payroll tax expense for October?

A)$16,272.00
B)$18,028.80
C)$24,028.80
D)$78,028.80

Question 54

Use the following information for questions.
Silver Ltd.has 35 employees who work 8-hour days and are paid hourly.On January 1, 2017, the company began a program of granting its employees 10 days paid vacation each year.Vacation days earned in 2017 may be taken starting on January 1, 2018.Information relative to these employees is as follows: Silver has chosen to accrue the liability for compensated absences (vacation pay)at the current rates of pay in effect when the vacation pay is earned.
What is the amount of vacation pay expense that should be reported on Silver's income statement for 2017?

A)$37,800
B)$36,120
C)$34,440
D)$ 0

Question 55

Zircon Ltd., a GST registrant, buys $4,500 worth of Office Supplies for their own use.The purchase is subject to 8% PST and 5% GST.What amount will be debited to the Office Supplies account as a result of this transaction?

A)$4,500
B)$4,725
C)$4,860
D)$5,085

Question 56

Willow Corp.'s payroll for the period ended October 31, 2017 is summarized as follows: Assume the following payroll tax rates:
CPP/QPP for employer and employee 4.95% each
Employment Insurance 1.83% for employee
1.4 times employee premium for employer
To the nearest dollar, what amount should Willow accrue as its share of payroll taxes in its October 31, 2017 statement of financial position?

A)$ 4,894
B)$ 5,070
C)$ 6,102
D)$20,070

Question 57

On September 1, 2017, Coffee Ltd.issued a $1,800,000, 12% note to Humungous Bank, payable in three equal annual principal payments of $600,000.On this date, the bank's prime rate was 11%.The first payment for interest and principal was made on September 1, 2018.At December 31, 2018, Coffee should record accrued interest payable of

A)$72,000.
B)$66,000.
C)$48,000.
D)$44,000.

Question 58

Use the following information for questions.
Antimony Inc.developed a new gold mine during 2017, and is required by provincial law to restore the site to its previous condition once mining operations are completed.The company estimates that the mine will close in 20 years and that the land restoration will cost $5,000,000.Antimony uses a 6% discount rate.
To the nearest dollar, the entry to record the asset retirement obligation is

Question 59

On April 30, 2017, Canuck Oil Corp.purchased an oil tanker depot for $1,200,000 cash.The company expects to operate this depot for eight years, at which time they will be legally required to dismantle the structure and remove the underground storage tanks.Canuck Oil estimates this asset retirement obligation (ARO)will cost $200,000.Assuming a 5% discount rate, to the nearest dollar, the amount to be recorded as the ARO is

A)$ 25,000.
B)$135,368.
C)$150,000.
D)$295,491.

Question 60

At December 31, 2017, Manganese Corp.'s records show the following balances, all of which are normal: PST Payable, $625; GST Payable, $600; GST Receivable, $488.In January 2018, Manganese pays the Federal Government the net amount owing regarding GST owing from December.The journal entry to record this payment will include a

A)debit to GST Payable of $112.
B)credit to Cash of $600.
C)credit to GST Payable of $600.
D)credit to GST Receivable of $488.

Question 61

Woodwards Store sells major household appliance service contracts for cash.The service contracts are for a one-year, two-year, or three-year period.Cash receipts from contracts are credited to unearned service contract revenues.This account had a balance of $600,000 at December 31, 2016 before year-end adjustment.Service contract costs are charged as incurred to the service contract expense account, which had a balance of $150,000 at December 31, 2016.Outstanding service contracts at December 31, 2016 expire as follows: What amount should be reported as unearned service contract revenues in Woodwards' December 31, 2016 statement of financial position?

A)$450,000
B)$415,000
C)$300,000
D)$275,000

Question 62

Jackpine Trading Stamp Co.records trading stamp revenue and provides for the cost of redemptions in the year stamps are sold to licensees.Jackpine's past experience indicates that only 75% of the stamps sold to licensees will be redeemed.Jackpine's liability for stamp redemptions was $3,000,000 at December 31, 2017.Additional information for 2017 is as follows: If all the stamps sold in 2017 were presented for redemption in 2017, the redemption cost would be $1,000,000.What amount should Jackpine report as a liability for stamp redemptions at December 31, 2017?

A)$3,750,000
B)$2,650,000
C)$2,400,000
D)$1,650,000

Question 63

At January 1, 2017, Neon Corp.owned a machine that had cost $100,000.The accumulated depreciation to date was $60,000, estimated residual value was $6,000, and fair value was $160,000.On January 4, 2017, this machine suffered major damage due to Argon Corp.'s actions and was written off as worthless.In October 2017, a court awarded damages of $160,000 against Argon in favour of Neon.At December 31, 2017, the final outcome of this case was awaiting appeal and was, therefore, uncertain.However, in the opinion of Neon's attorney, Argon's appeal will be denied.At December 31, 2017, what amount should Neon accrue for this gain contingency?

A)$160,000
B)$130,000
C)$100,000
D)$0

Question 64

Platinum Corp.uses the expense approach to account for warranties.They sell a used car for $30,000 on Oct 25, 2017, with a one year warranty covering parts and labour.Warranty expense is estimated at 2% of the selling price, and the appropriate adjusting entry is recorded at Dec 31, 2017.On March 12, 2018, the car is returned for warranty repairs.This cost Platinum $200 in parts and $120 in labour.When recording the March 12, 2018 transaction, Platinum would debit Warranty Expense with

A)zero.
B)$120.
C)$200.
D)$320.

Question 65

In 2017, Hydrogen Corp.began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: Hydrogen uses the expense approach to account for warranties.What is the estimated warranty liability at the end of 2018?

A)$73,500
B)$43,500
C)$28,500
D)$12,000

Question 66

Krypton Foods distributes coupons to consumers which may be presented, on or before a stated expiry date, to grocery stores for discounts on certain Krypton products.The stores are reimbursed when they send the coupons in to Krypton.In Krypton's experience, only about 50% of these coupons are redeemed.During 2017, Krypton issued two separate series of coupons as follows: Krypton's only journal entries for 2017 recorded debits to coupon expense, and credits to cash of $268,000.Their December 31, 2017 statement of financial position should include a liability for unredeemed coupons of

A)$0.
B)$30,000.
C)$62,000.
D)$180,000.

Question 67

Asbestos Corp.is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals.Asbestos's lawyer states that it is likely the corporation will lose the suit and be found liable for a judgement which may cost Asbestos anywhere from $300,000 to $1,500,000.However, the lawyer states that the most likely cost is $900,000.As a result of the above facts, using ASPE, Asbestos should accrue

A)a loss contingency of $300,000 and disclose an additional contingency of up to $1,200,000.
B)a loss contingency of $900,000 and disclose an additional contingency of up to $600,000.
C)a loss contingency of $900,000 but not disclose any additional contingency.
D)no loss contingency but disclose a contingency of $300,000 to $1,500,000.

Question 68

Lee Kim Inc.'s most recent statement of financial position includes To two decimals, Lee Kim Inc.has a current ratio of

A).27.
B).48.
C)1.63.
D)2.20.

Question 69

Potassium Corp.uses the revenue approach to account for warranties.During 2017, the company sold $500,000 worth of products, all of which carried a two-year warranty (included in the price).It was estimated that 2% of the selling price represented the warranty portion, and that 60% of this related to 2017, and 40% to 2018.Assuming that Potassium incurred costs of $3,700 to service the warranties in 2018, what is the net warranty revenue (revenue minus warranty costs)for 2018?

A)$300
B)$1,300
C)$3,700
D)$4,000

Question 70

Presented below is information available for Radon Corp.:
Current Assets
Total current liabilities are $100,000.To two decimals, Radon's acid-test ratio is

A)5.60.
B)5.30.
C)2.80.
D).36.