Accounting Chapter 8

Issuing a note payable for cash results in an

Increase in assets and an increase in liabilities

Which of the following are examples of fringe benefits provided by employers to their employees?

Contributions to retirement and other savings accounts; payment of insurance premiums on employees behalf; reduced or no-cost company-provided services

On November 1, 2018, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2019. The journal entry on November 1, 2018 would include which of the following?

Credit to Note Payable $100,000; Debit to Cash $100,000

Sally Company manufactures large kitchen appliances. For the first year of purchase, the company will repair any manufacturing defect free of charge. Sally apparently sells its appliances with a (blank)

Warranty

Current assets minus current liabilities equals

working capital

Which of these payroll taxes are paid by the employer and the employee?

Medicare and Social Security

What are the two criteria used to determine whether a contingent liability is reported in the financial statements?

The ability to estimate the amount of the loss; The likelihood of the loss

Which of the following are essential characteristics of a liability?

The future sacrifices arises from a present obligation; the obligation results from a past event; a future sacrifice of an economic benefit is probable

Rhodes borrowed $5,000 by signing a 5-year note with an interest rate of 8%. On the date the note is signed, Rhodes should

credit notes payable by $5,000

The formula for the acid-test or quick ratio is quick assets divided by:

current liabilities

A liability is a (blank) responsibility to sacrifice (blank) in the future due to a transaction or other event that happened in the (blank)

current; assets; past

The acid-test ratio is based on a more conservative measure than the current ratio of the company's ability to

pay its current liabilities

The term referring to a company having a sufficient amount of cash to pay its current debts is:

security