test 3

If it is probable that is will become an actual liability and the amount can be reasonably estimated

A contingent liability is recorded as a journal entry in the accounting records

Warranty liability is debited

A repair to an appliance under warranty occurs within the warranty period. what adjustment is made?

expense account

A revenue expenditure usually results in debit to an

Debiting interest expense and crediting interest payable

Accrued interest on a short term note payable is recorded by

Debit to loss on sale of asset for 800

An asset that cost 24,000 and has accumulated depreciation of 18,000 is sold for 5,200. The entry to record the sale would include a

Credit to unearned subscription revenue for $90

Computing magazine recieves $90 in advance from a customer for a 3 year subscription.

Which of the following terms does not describe the interest rate printed on the bond certificate?

Effective rate

GAAP requires that research and development costs to develop a new product be

Expense in the period incurred

If bonds were initially issued at a discount, the carrying value of the bond on the issuers books will

Increase as the bonds approach their maturity date

The collins company sold $200,000 of 10 year bonds for $190,000 the stated rate on the bonds was 8% and interest is paid annually on Dec 31. What entry would be made on Dec 31 when interest is paid?

Interest expense Discount on BP

Mathcing

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Cost less accumulated depreciation

The book value or carrying value of an asset is defined as

Original cost minus accumulated depreciation

The depreciable cost of an asset

If a companys bond are callable

The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate is 4%

When will bonds sell at a discount?

The started rate of interest is less than yield/ market of interest at the time of issue

Amortization

The term used for allocating the cost of an intangible asset to the periods it benefits is:

Land

Which of the following assets is not subject to depreciation, depletion, and amortization?

State income tax

Which of the following is a tax paid by the employee but no the employer?

Estimating useful life in years

Which of the following is irrelevant in computing a machines depreciation expense using the units of production method?

The asset is sold for price greater than the assets book value

a gain is recorded on the sale of the plant asset when

Stasia inc has a weekly payroll of $8,000 for 5 day work week beginning each monday and ending each friday. Stasia year end is december 31st. If dec 31st falls on a wednesday statsia would make an adjustment entry to

increase wages expense by 4,800

Long term debt generally includes

obligations that extend beyond one year

contingent liabilities

potential liabilities on short term note payable is recorded by:

a convertable bond is one where

the bondholder can covert the bond into common stock at a future time

Which of the following is not an advantage of issuing long term debt?

the risk of becoming bunkrupt is reduced

Salaries payable

which of the following most likely would be classified as a current liability?