Question 1

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is reasonably possible but amount is not estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is reasonably possible but the amount is not estimable, the proper treatment is to disclose the contingent liability in the notes to the financial statements without recording it in the accounts.

Question 2

On August 1, Batson Company issued a 60-day note with a face amount of $140,000 to Jergens Company for merchandise inventory. 
(Assume a 360-day year is used for interest calculations.)
a. Determine the proceeds of the note assuming the note carries an interest rate of 6%.
b. Determine the proceeds of the note assuming the note is discounted at 6%.

Accepted Answer

The answer of On August 1, Batson Company issued a...

Question 3

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is remote and amount is estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is considered remote and the amount is estimable, the proper treatment is to neither record nor disclose the contingent liability.

Question 4

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is probable but amount is not estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is probable but the amount is not estimable, the proper treatment is to disclose the contingent liability in the notes to the financial statements without recording it in the accounts.

Question 5

Journalize the following, assuming a 360-day year is used for interest calculations:?
Apr. 30 Issued a $150,000, 30-day, 6% note dated April 30 to Misner Co. on account.
May 30 Paid Misner Co. the amount owed on the note dated April 30.

Accepted Answer

The answer of Journalize the following, assuming a 360-day year...

Question 6

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Cash + Temporary investments + Accounts receivable
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

Cash, temporary investments, and accounts receivable are considered quick assets because they can be quickly converted into cash, typically within 90 days or less, without a significant loss in value.

Question 7

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Current assets - Current liabilities
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

Working capital is defined as current assets minus current liabilities, representing the liquidity available to a business for day-to-day operations.

Question 8

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Reasonably possible likelihood of a liability
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

A reasonably possible likelihood of a liability means that the event is more than remote but less than probable, so it should be disclosed only in the notes to the financial statements.

Question 9

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is reasonably possible and amount is estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is reasonably possible and the amount is estimable, the proper treatment for the contingent liability is to disclose it only in the notes to the financial statements, without recording it in the accounts.

Question 10

Roseland Design borrowed $700,000 on a 90-day note from CorpOne Funding Company. CorpOne discounts the note at 8%. (Assume a 360-day year is used for interest calculations.)

(a) 	Journalize Roseland’s entries to record:
     a.	The issuance of the note.
     b.	The payment of the note at maturity.
 	 
(b) 	Journalize CorpOne’s entries to record:
     a.	The receipt of the note.
     b.	The receipt of the payment of the note at maturity.

Accepted Answer

The answer of Roseland Design borrowed $700,000 on a 90-day...

Question 11

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Probable likelihood and estimable liability
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

Probable likelihood and estimable liability are best addressed by recording an accrual and disclosing in the notes to the financial statements, as per accounting principles.

Question 12

A business issued a 120-day, 6% note for $10,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record 
(a) the issuance of the note and 
(b) the payment of the note at maturity, including interest. $$\begin{array}{l}
\text { Journal }\
\begin{array} { | c | c | c | c | } 
\hline & \text { Description } & \text { Debit } & \text { Credit } \
\hline \text { (a) } & & & \
\hline & & & \
\hline & & & \
\hline \text { (b) } & & & \
\hline & & & \
\hline & & & \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of A business issued a 120-day, 6% note...

Question 13

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is remote and amount is not estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is considered remote and the amount is not estimable, generally accepted accounting principles (GAAP) suggest that neither recording nor disclosing the contingent liability is necessary.

Question 14

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Probable likelihood of a liability but cannot be estimated
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

The correct match for "Probable likelihood of a liability but cannot be estimated" is to "Disclose only in notes to financial statements." This is because when a company cannot estimate the amount of a probable liability, it should disclose the nature of the contingency and an estimate of the possible financial effect in the notes to the financial statements, if possible.

Question 15

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Measures the "instant" debt-paying ability of a company
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

The Quick Ratio, also known as the Acid-test Ratio, measures a company's ability to pay its short-term obligations with its most liquid assets, thus providing an "instant" picture of its debt-paying ability without relying on inventory assets.

Question 16

Match each payroll item that follows to the one item (a-f) that best describes its characteristics.
-State unemployment compensation tax  (SUTA)
A)Amount is limited, withheld from employee only
B)Amount is limited, withheld from employee and matched by employer
C)Amount is limited, paid by employer only
D)Amount is not limited, withheld from employee only
E)Amount is not limited, withheld from employee and matched by employer
F)Amount is not limited, paid by employer only

Accepted Answer

State unemployment compensation tax (SUTA) is usually limited and paid by the employer only. It is not a tax that is withheld from the employee's paycheck.

Question 17

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-(Cash + Temporary investments + Accounts receivable)/Current liabilities
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

The formula given represents the Quick Ratio, which measures a company's ability to meet its short-term obligations with its most liquid assets.

Question 18

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Remote contingent liability
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

A remote contingent liability is one that is unlikely to occur, and therefore, no disclosure is needed in the notes to the financial statements.

Question 19

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Current assets/Current liabilities
A)Current ratio
B)Working capital
C)Quick assets
D)Quick ratio
E)Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Accepted Answer

The answer of Match each of the following items with...

Question 20

Use the following key (a-d) to identify the proper treatment of each contingent liability.
-Event is probable and amount is estimable
A)Record only
B)Record and disclose
C)Disclose only
D)Do not record or disclose

Accepted Answer

When an event is probable and the amount can be estimated, the proper treatment is to record the liability in the financial statements and also disclose it in the notes to the financial statements.

Quiz 11: Current Liabilities and Payroll

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is reasonably possible but amount is not estimable

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is estimable

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is probable but amount is not estimable

Journalize the following, assuming a 360-day year is used for interest calculations:? Apr. 30 Issued a $150,000, 30-day, 6% note dated April 30 to Misner Co. on account. May 30 Paid Misner Co. the amount owed on the note dated April 30.

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Cash + Temporary investments + Accounts receivable

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Current assets - Current liabilities

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Reasonably possible likelihood of a liability

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is reasonably possible and amount is estimable

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Probable likelihood and estimable liability

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Probable likelihood of a liability but cannot be estimated

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Measures the "instant" debt-paying ability of a company

Match each payroll item that follows to the one item (a-f) that best describes its characteristics. -State unemployment compensation tax (SUTA)

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -(Cash + Temporary investments + Accounts receivable) /Current liabilities

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Remote contingent liability

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Current assets/Current liabilities

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is probable and amount is estimable