Chapter 13: Current Liabilities and Contigencies

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which of the following is included in employer payroll taxes

FICA, Federal Unemployment Taxes, and State Unemployment Taxes

State and federal unemployment taxes are imposed on both employers and employees.

False, only employers

A firm's natural resource exploitation site will require an expenditure of 5 million to reclaim the sit for environmental purposes. That expenditure is expected to be made 5 years from now. The present value today of that amount is 3.5 million. Because of this obligation, by what amount will (1) total depletion of the site increase and (2) how much interest (accretion) expense will be recognized, over the five years (in millions)? a) 1- 3.5 2- 1.5 b) 1- 5 2- 1.5 c) 1- 0 2- 0 d) 1- 3.5 2- 3.5

a

a liability for compensated abscences is

accrued only if specific conditions are met

A returnable cash deposit should be classified by the company as a laibility when the deposit is received from a) customer - yes employee - no b) customer - yes employee - yes c) customer - no employee - yes d) customer - no employee - no

b

Compensated Absences are a

current liability

accrued vacation pay

current liability

bank overdraft

current liability

cash dividends declared but unpaid

current liability

current maturities of long-term debts to be paid from current assets

current liability

employee payroll deductions unremitted

current liability

estimated taxes payable

current liability

gift certificates sold to customers but not yet redeemed

current liability

premium offers outstanding

current liability

sales taxes payable

current liability

loans from officers

current liability or long-term liability

service warranties on appliance sales

current liability or long-term liability

deposit received from a customer to guarantee performance of a contract

current or long-term liability

discount on notes payable

current or long-term liability

A retail store sells gift certificates that are redeemable in merchandise. When the gift certificate was sold for cash, a

deferred revenue account should be increased

management can estimate the amount of the loss that will occur if a foreign government expropriates some company assets. If expropriation is reasonably possible, a loss contigency should be:

disclosed but not accrued as a liability

dividends in arrears on preferred stock

footnote disclosure

personal injury claim pending (assume not probable and/or not reasonably estimable)

footnote disclosure

which of the following is not an example of a current liability

preferred dividends in arrears

gain contigencies are usually recognized in the income statement when:

realized

current liabilities are defined as obligations whose liquidation is resonably expected to

require use of current assets or the creation of other current liabilities

employer payroll taxes include all the following except

state income taxes

A company can classify short-term debt expected to be refinanced as noncurrent only if one of the following criteria is met as of the balance sheet date:

the liability is contractually due to be settled more than one-year (or operating cycle if longer) after the balance sheet date

Wyatt Co. has a probable 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. The loss accrual should be

the minimum of the range


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