Question 1

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed.
A)Current liability
B)Long-term liability

Accepted Answer

The terms 2/20, n/40 suggest that the amount owed is a trade payable, which is a type of current liability. The fact that no note was executed does not change its classification.

Question 2

The interest earned on the principal amount only is referred to as ______________________________.

Accepted Answer

The answer of The interest earned on the principal amount...

Question 3

Match each of the following terms pertaining to liabilities to their definitions.
-Accounts that will be satisfied within one year or the next operating cycle.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

This term specifically refers to liabilities that are expected to be satisfied within one year or the next operating cycle.

B) Accounts payable
 This term refers to amounts owed to suppliers or vendors for goods and services received and not yet paid for.

C) Notes payable
 This term refers to a written promise to pay back a specific amount of money at a future date.

E) Current maturities of long-term liabilities
 This term refers to the portion of long-term debt that is due within the next year.

F) Accrued liabilities
 This term refers to expenses that have been incurred but not yet paid or recorded as a liability, such as salaries or taxes.

G) Contingent liability
 This term refers to a potential liability that may or may not occur based on the outcome of a future event.

H) Estimated liability
 This term refers to a liability that is known to exist but the exact amount or timing is uncertain, such as a legal settlement that has not yet been determined.

Question 4

Match each of the following terms pertaining to liabilities to their definitions.
-A liability that involves an existing condition for which the outcome is not known with certainty and depends on some future event.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

A contingent liability is a liability that involves an existing condition for which the outcome is not known with certainty and depends on some future event.

Question 5

Match each of the following terms pertaining to liabilities to their definitions.
-A contra-liability account that represents interest deducted from a loan or note in advance.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

Discount on notes payable is a contra-liability account that represents the interest deducted in advance from the face value of a note payable. This discount effectively reduces the total amount of liability recorded on the balance sheet until it is amortized over the life of the note.

Question 6

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed for years 2018 to 2022 to a creditor as annual installment payments on a ten-year note, due June 30, 2022.
A)Current liability
B)Long-term liability

Accepted Answer

Since the payments are due after one year from the balance sheet date, they are considered as long-term liabilities.

Question 7

Match each of the following terms pertaining to liabilities to their definitions.
-The portion of a long-term liability that will be paid within one year of the balance sheet date.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

Current maturities of long-term liabilities refers to the portion of a long-term liability that must be paid within one year of the balance sheet date.

Answer: A
 Current liability refers to any debt that needs to be repaid within one year of the balance sheet date.

Answer: C
 Notes payable refers to any formal written promise to pay a specified amount of money that is due at a specific future date.

Answer: D
 Discount on notes payable refers to the difference between the face value of a note and the amount received when it is issued.

Answer: F
 Accrued liabilities refer to any expenses that have been incurred but not yet paid or recorded, such as unpaid wages, taxes, or interest.

Answer: G
 Contingent liability refers to a potential obligation that may arise depending on the outcome of a future event, such as a lawsuit, environmental cleanup, or product warranty claim.

Answer: H
 Estimated liability refers to a debt or obligation for which the exact amount is uncertain, and must be estimated using available information, such as a provision for employees' retirement benefits.

Question 8

The ____________________________ of a single sum represents the value today of a single amount to be received or paid at a future time.

Accepted Answer

The answer of The ____________________________ of a single sum represents...

Question 9

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-Estimated warranty payable by June 30, 2017.
A)Current liability
B)Long-term liability

Accepted Answer

The estimated warranty payable by June 30, 2017 is a liability that is expected to be settled within one year, making it a current liability on the December 31, 2016 balance sheet.

Question 10

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed to a creditor on a note due August 15, 2024.
A)Current liability
B)Long-term liability

Accepted Answer

The note is not due until August 15, 2024, which is more than one year after the balance sheet date of December 31, 2016. Therefore, it is classified as a long-term liability.

Question 11

From the following list, identify whether the change in the account balance during the year would be reported as an operating (O), an investing (I), or a financing (F) activity or not separately reported on the statement of cash flows (N).Assume that the indirect method is used to determine the cash flows from operating activities.
-Taxes payable
A)O - Operating
B)I - Investing
C)F - Financing
D)N - Not separately reported on the Statement of Cash Flows

Accepted Answer

Changes in taxes payable are related to income taxes, which are considered part of operating activities because they arise from the company's primary operations.

Question 12

Match each of the following terms pertaining to liabilities to their definitions.
-A liability that has been incurred but has not been paid as of the balance sheet date.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

Accrued liabilities are expenses that have been incurred but not yet paid by the end of the accounting period, fitting the description provided.

Question 13

The issue price of a bond is based on the _____________________ of the cash flows that the bond will produce.

Accepted Answer

The answer of The issue price of a bond is...

Question 14

Match each of the following terms pertaining to liabilities to their definitions.
-Amounts owed for the purchase of inventory, goods, or services acquired in the normal course of business.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

Accounts payable refers to amounts owed for the purchase of inventory, goods, or services acquired in the normal course of business.

Answer: C 
 Notes payable refers to amounts owed for borrowing money that are typically long-term liabilities.

Answer: D 
 Discount on notes payable refers to the difference between the face value of a note payable and the amount received from the lender, which indicates the effective interest rate of the borrowing.

Answer: E 
 Current maturities of long-term liabilities refer to the portion of long-term debts that must be paid within the next year, which are classified as current liabilities.

Answer: F 
 Accrued liabilities refer to expenses that have been incurred but not yet paid or recorded, such as wages, interest, or taxes.

Answer: G 
 Contingent liabilities refer to potential future obligations that may or may not occur depending on certain events, such as pending lawsuits or warranties.

Answer: H 
 Estimated liabilities refer to future obligations that can be reasonably estimated based on past events and experiences, such as pension obligations or environmental cleanup costs.

Question 15

Match each of the following terms pertaining to liabilities to their definitions.
-Amounts owed that are represented by a formal contractual agreement.These amounts usually require the payment of interest.
A)Current liability
B)Accounts payable
C)Notes payable
D)Discount on notes payable
E)Current maturities of long-term liabilities
F)Accrued liabilities
G)Contingent liability
H)Estimated liability

Accepted Answer

Notes payable are liabilities that are created through formal legal documents that typically stipulate interest payments.

Question 16

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed in 2017 to a creditor as an annual installment payment on a ten-year note, due June 30, 2022.
A)Current liability
B)Long-term liability

Accepted Answer

The amount due in 2017 is classified as a current liability because it is payable within one year from the balance sheet date (December 31, 2016). The remainder of the note payable that is due after 2017 would be classified as a long-term liability.

Question 17

If the market value that you paid for a car is known and the annual payment and number of payments is known, the table factor to help find the interest rate can be calculated by dividing ______________________.

Accepted Answer

The answer of If the market value that you paid...

Question 18

If a 12% interest rate is compounded quarterly for 3 years, then there would be __________________________ compounding periods.

Accepted Answer

The answer of If a 12% interest rate is compounded...

Question 19

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet.
-An amount of money owed to the federal government based on the company's annual income.
A)Current liability
B)Long-term liability

Accepted Answer

The amount owed to the federal government based on the company's annual income is typically paid within a year, making it a current liability.

Question 20

If the present and future values are known along with the number of periods, then the _________________________ can be determined.

Accepted Answer

The answer of If the present and future values are...

Quiz 9: Current Liabilities, Contingencies, and the True Value of Money

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed.

The interest earned on the principal amount only is referred to as ______________________________.

Match each of the following terms pertaining to liabilities to their definitions. -Accounts that will be satisfied within one year or the next operating cycle.

Match each of the following terms pertaining to liabilities to their definitions. -A liability that involves an existing condition for which the outcome is not known with certainty and depends on some future event.

Match each of the following terms pertaining to liabilities to their definitions. -A contra-liability account that represents interest deducted from a loan or note in advance.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed for years 2018 to 2022 to a creditor as annual installment payments on a ten-year note, due June 30, 2022.

Match each of the following terms pertaining to liabilities to their definitions. -The portion of a long-term liability that will be paid within one year of the balance sheet date.

The ____________________________ of a single sum represents the value today of a single amount to be received or paid at a future time.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -Estimated warranty payable by June 30, 2017.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to a creditor on a note due August 15, 2024.

Match each of the following terms pertaining to liabilities to their definitions. -A liability that has been incurred but has not been paid as of the balance sheet date.

The issue price of a bond is based on the _____________________ of the cash flows that the bond will produce.

Match each of the following terms pertaining to liabilities to their definitions. -Amounts owed for the purchase of inventory, goods, or services acquired in the normal course of business.

Match each of the following terms pertaining to liabilities to their definitions. -Amounts owed that are represented by a formal contractual agreement.These amounts usually require the payment of interest.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed in 2017 to a creditor as an annual installment payment on a ten-year note, due June 30, 2022.

If the market value that you paid for a car is known and the annual payment and number of payments is known, the table factor to help find the interest rate can be calculated by dividing ______________________.

If a 12% interest rate is compounded quarterly for 3 years, then there would be __________________________ compounding periods.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to the federal government based on the company's annual income.

If the present and future values are known along with the number of periods, then the _________________________ can be determined.