Solved

Match Each Item to the Appropriate Effect on Liabilities You

Question 102

Matching

Match each item to the appropriate effect on liabilities You may use each choice more than once or not at all. In some cases, two effects are correct.

Premises:

Responses:

Purchased supplies on account.

Decrease current liabilities

Paid accounts payable.

Increase current liabilities

Issued a $1,000 short-term note payable for $970.

No effect on recorded current liabilities

Amortized the discount of the short-term note payable.

Accrued contingent liability

A portion of long-term debt is due next year.

Contingent liability disclosed in the notes only

Declared cash dividends to stockholders.

Paid the cash dividend previously declared.

Received money from customers prior to delivery of the product to the customer.

Delivered products to a customer who previously paid for that product.

Collected sales tax on behalf of the state government.

Accrued payroll taxes that the firm has to pay to the federal government within three months.

Accrued a bonus amounting to 5% on reported income to the CEO.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is remote.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is reasonably possible.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is highly probable.

Accrued warranty expense.

Premises:

Purchased supplies on account.

Paid accounts payable.

Issued a $1,000 short-term note payable for $970.

Amortized the discount of the short-term note payable.

A portion of long-term debt is due next year.

Declared cash dividends to stockholders.

Paid the cash dividend previously declared.

Received money from customers prior to delivery of the product to the customer.

Delivered products to a customer who previously paid for that product.

Collected sales tax on behalf of the state government.

Accrued payroll taxes that the firm has to pay to the federal government within three months.

Accrued a bonus amounting to 5% on reported income to the CEO.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is remote.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is reasonably possible.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is highly probable.

Accrued warranty expense.

Responses:

Decrease current liabilities

Increase current liabilities

No effect on recorded current liabilities

Accrued contingent liability

Contingent liability disclosed in the notes only

Correct Answer:

Premises:

Responses:

Purchased supplies on account.

Paid accounts payable.

Issued a $1,000 short-term note payable for $970.

Amortized the discount of the short-term note payable.

A portion of long-term debt is due next year.

Declared cash dividends to stockholders.

Paid the cash dividend previously declared.

Received money from customers prior to delivery of the product to the customer.

Delivered products to a customer who previously paid for that product.

Collected sales tax on behalf of the state government.

Accrued payroll taxes that the firm has to pay to the federal government within three months.

Accrued a bonus amounting to 5% on reported income to the CEO.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is remote.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is reasonably possible.

In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is highly probable.

Accrued warranty expense.