Accounting Exam 5

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays March 12, then the amount paid to the seller would be A. $3,136 B. $3,150 C. $3,168 D. $3,200

$3,136

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays April 2, then the amount paid to the seller would be A. $3,136 B. $3,150 C. $3,168 D. $3,200

$3,200

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is: A. $1,800.00 B. $1,411.20 C. $2,154.60 D. $554.04

1800.00

In 2014, Stockwell, Inc. sold 1,000 carpets for $50 each. The carpets carry a 2-year warranty for repairs. Stockwell estimates that repair costs will average 2% of the total selling price. What is the amount that would be recorded in the warranty liability account as a result of selling the carpets during 2014? A. $1,000 B. $ 500 C. $ 20 D. No liability should be recorded until the carpets are returned for repairs.

1,000

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If current liabilities are $14,350, then the quick ratio would be A. 5.0 to 1 B. 2.6 to 1 C. 2.0 to 1 D. 1.2 to 1

1.2 to 1

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the quick ratio would be A. 1.75 to 1 B. 2.25 to 1 C. 3.00 to 1 D. 3.50 to 1

1.75 to 1

If the interest factor used to calculate the future value of $1 at 6% for 5 periods is 1.338, then the present value of $1 at 6% for 5 periods is A. 1.338 ́ 1.338. B. 1/1.338. C. 1/(1.338 x 1.338). D. 0.338.

1/1.338

The total amount of interest compounded quarterly on a $1,500 note payable for 1 year at 12% is A. $180.00 B. $187.50 C. $189.00 D. $ 45.00

189.00

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is A. $1,980 B. $2,205 C. $6,600 D. $7,980

1980

The future value of $6,000 at 12% compounded quarterly for 5 years is A. $ 6,954 B. $ 9,600 C. $10,572 D. $10,836

10,836

If Garrett has $5,000 per year to invest for 10 years and wants to accumulate $87,745 at the end of that time, he must find an investment that is earning at a rate of A. 15% B. 12% C. 11% D. 6%

12%

A cereal company includes one premium coupon in every cereal box. Upon returning 10 such coupons to the company, a customer will be sent a free cereal bowl. In a recent year, the company sold 200,000 boxes of cereal for $1 a box. It is estimated that 20% of the coupons will be returned. If the cereal bowls cost the company $3 each, what amount of liability for premium redemptions must be recorded by the company? A. $ 6,000 B. $ 12,000 C. $ 24,000 D. $200,000

12,000

Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600. If the current ratio is 2.5 to 1, then current assets are A. $ 200 B. $ 625 C. $1,250 D. $2,000

1250

Mackie's individual retirement account (IRA) currently has a balance of $100,000 and is earning 6%. Beginning one year from today, what equal annual amounts can be withdrawn from the IRA for 10 years so that the balance after the tenth withdrawal is zero? A. $10,000 B. $12,950 C. $13,587 D. $14,237

13,587

Winston wins the lottery. He wins $20,000 per year to be paid to him for 10 years. The state offers him the choice of a cash settlement now instead of the annual payments for 10 years. If the interest rate is 6%, what is the amount the state will offer for a settlement today? A. $147,200 B. $154,440 C. $175,000 D. $200,000

147,200

How much would have to be deposited in a savings account earning 6%, so that equal annual withdrawals of $200 can be made at the end of each of 10 years? The balance at the end of the last year would be zero. A. $ 528 B. $1,472 C. $2,000 D. $2,636

1472

Employees earn $5,000 per day, work five days per week, Monday through Friday, and get paid every Friday. If the previous payday was January 26 and the accounting period ends on January 31, what amount is the ending balance in the wages payable account? A. $ 9,000 B. $10,000 C. $15,000 D. $25,000

15,000

Approximately how many years will it take for a sum invested at 8% with annual compounding to quadruple? A. 9 years B. 17 years C. 18 years D. 81 years

18 years

If you must calculate the present value of an amount at 8% compounded quarterly for 2 years, then the interest factor used in the calculation is A. 8% for two periods B. 2% for eight periods C. the interest factor for 8% for two periods divided by 4 D. twice that for one period at 8% multiplied by 2

2% for eight periods

Ralph wants to save some money so that he can make a down payment of $3,000 on a car when he graduates from college 4 years from now. If he opens a savings account and earns 3% on his money, compounded annually, how much will he have to invest now? A. $2,520 B. $2,664 C. $2,910 D. $3,000

2,664

In 2012, Accu Heating Company sold 400 water heaters for $350 each. The water heaters carry a 2-year warranty for repairs. Accu estimates that repair costs will average 2% of the total selling price. How much is recorded in the warranty liability account as a result of selling the water heaters during 2012? A. $4,200 B. $2,800 C. $1,400 D. no liability should be recorded until the water heaters are brought back for repairs.

2,800

If current assets amount to $62,000, total assets $350,000, current liabilities $31,000, and total liabilities $125,000, then the current ratio is A. 0.5 to 1 B. 2.0 to 1 C. 2.8 to 1 D. 3.0 to 1

2.0 to 1

If current assets amount to $150, total assets $350, current liabilities $65, and total liabilities $100, then the current ratio is A. 2.12 to 1 B. 2.31 to 1 C. 3.03 to 1 D. 3.50 to 1

2.31 to 1

Long-term assets are $5,000, current liabilities are $700, and long-term liabilities are $3,000. If the current ratio is 3 to 1, then current assets are A. $9,000 B. $6,900 C. $4,300 D. $2,100

2100

In 2013, Minter Co.sold 150 hot air balloons at $4,000 each. The balloons carry a 5-year warranty for defects. Minter estimates that repair costs will average 4% of the total selling price. The estimated warranty liability at the beginning of the year was $14,000. $20,000 in claims was actually incurred during the year to honor their warranty. What was the warranty expense for 2013? A. $10,000 B. $18,000 C. $20,000 D. $24,000

24,000

Cory and Ginger want to buy an airplane. They find one that will cost $200,000. They must pay 10% down, and can get the balance financed with a 10 year loan at 7% interest and annual payments. What is their annual payment? A. $26,826 B. $25,626 C. $24,457 D. $19,260

25,626

If a company purchases $3,000 worth of inventory with terms of 1/15, n30 and pays within 15 days, then the amount paid to the seller would be A. $2,550 B. $2,970 C. $3,000 D. $3,030

2970

To calculate the future value of an amount that is invested at 12%, compounded quarterly, at the end of three years, the interest factor used would be A. 1% for 12 periods B. 3% for four periods C. 3% for 12 periods D. 12% for three periods

3% for 12 periods

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the current ratio would be A. 1.75 to 1 B. 2.25 to 1 C. 3.00 to 1 D. 3.50 to 1

3.50 to 1

A company's weekly payroll amounts to $50,000 and payday for the week is every Friday. Employees work five days per week, Monday through Friday. The appropriate journal entry was recorded at the end of the accounting period, Tuesday, March 31, 2013. What amount is wages expense for April for the payday, Friday, April, 3, 2013? A. $ -0- B. $20,000 C. $30,000 D. $50,000

30,000

Speed Company has current assets of $150,000 and current liabilities of $60,000. How much inventory could it purchase on account and achieve its minimum desired current ratio of 2 to 1? A. $10,000 B. $20,000 C. $30,000 D. $40,000

30,000

Denise wants to help pay for her niece's college tuition. Her niece will begin college in one year. How much would Denise need to put into a savings account today at 6% so that her niece can withdraw $10,000 per year for 4 years, and reduce the account balance to zero at the end of the 4 years? A. $31,680 B. $34,650 C. $37,600 D. $37,720

34,650

A company will have to pay a $50,000 liability in 4 years. How much must be deposited now into a bank account earning 8% compounded semiannually to fully fund the future payment? A. $34,000 B. $35,500 C. $36,523 D. $36,550

36,550

The present value of $7,000 to be received in 7 years at 7% compounded annually is A. $3,430 B. $6,657 C. $4,361 D. $7,000

4,361

The future value of equal semi-annual payments of $500 at 8% compounded semiannually for 4 years is A. $ 868 B. $2,000 C. $4,607 D. $9,320

4,607

Crystal, Inc. issued $41,000,000 of bonds. Assuming the most common denomination of bonds, the number of bonds sold was A. 41,000. B. 410,000. C. 4,100,000. D. 41,000,000.

41,000

Marti and Sue want to buy a house in 4 years. If the house will cost $180,000, how much must they deposit at the end of every year for the next 4 years at 5% compounded annually in order to buy the house? A. $32,040 B. $36,990 C. $41,763 D. $45,000

41,763

Ashley inherited $140,000 from an aunt. If Ashley decides not to spend her inheritance but to leave the money in her savings account until she retires in 15 years, how much money will she have assuming an annual interest rate of 8%, compounded semiannually? A. $308,000 B. $509,880 C. $454,020 D. $7,851,900

454020

In 2013, Minter Co. sold 100 hot air balloons at $4,000 each. The balloons carry a 5-year warranty for defects. Minter estimates that repair costs will average 4% of the total selling price. The estimated warranty liability at the beginning of the year was $42,000. $11,000 in claims was actually incurred during the year to honor their warranty. What was the balance in the ending estimated warranty liability at the end of the year? A. $47,000 B. $42,000 C. $37,000 D. $ 5,000

47000

On January 2, 2012, Dock Master Construction, Inc. issued $500,000, 10-year bonds for $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. At the maturity date, besides an interest payment, Dock Master would repay the bondholders A. $574,540. B. $520,000. C. $500,000. D. only the last interest payment.

500,000

Barton Company has just purchased a machine with a cost of $100,000, and signed a note agreeing to pay the manufacturer equal annual amounts of $17,400. If the current rate of interest is 8%, how many equal annual payments will be made? A. 6 B. 8 C. 10 D. 12

8

If Ying has $5,000 to invest and wants to have $10,000 at the end of 9 years, what compounded interest rate must she get on her money (assume annual compounding)? A. 5% B. 6% C. 7% D. 8%

8%

If interest is compounded annually, the total amount of interest on an $18,000 note payable for 4 years at 10% is A. $5,706 B. $7,200 C. $8,352 D. $8,500

8,352

David, a high school math teacher, wants to set up an IRA account into which he will deposit $2,000 per year. He plans to teach for 20 more years and then retire. If the interest on his account is 7% compounded annually, how much will be in his account when he retires? A. $4,800 B. $21,118 C. $74,458 D. $81,990

81,990

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, Chancellor Co.'s overall liability for this loan amounts to: A. $84,800 B. $80,000 C. $81,600 D. $83,200

81600

Kennesaw Corporation borrowed $90,000 by issuing a 12%, six-month note payable, all due at the maturity date. After one month, the company's total liability for this loan amounts to: A. $91,800 B. $90,900 C. $90,450 D. $90,000

90900

Actuarial, Inc. recorded $97,000 in salary expense for January, 2013. Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000. How much was paid in cash for salaries during January, 2013? A. $96,000 B. $97,000 C. $98,000 D. $99,000

96000

Which of the following statements regarding the inclusion of liabilities on the statement of cash flows is true? A. All current liabilities affect the operating activities section. B. Long-term liabilities generally affect the investing activities section. C. A decrease in a current liability from the beginning to the end of the year is accompanied by a decrease of cash. D. A decrease in a current liability from the beginning to the end of the year is accompanied by an inflow of cash.

A decrease in a current liability from the beginning to the end of the year is accompanied by a decrease of cash.

Which of the following is an example of a contingent liability? A. A liability for notes payable with interest included in the face amount. B. The liability for future warranty repairs on computers sold during the current period. C. A lawsuit pending against a restaurant chain for improper preparation of food. D. A corporate long-term employment contract with the chief executive officer.

A lawsuit pending against a restaurant chain for improper preparation of food.

Beasley Mason Company is a defendant in a lawsuit alleging damages of $3 billion. The litigation is anticipated to continue for several years, but no reasonable estimate can be made at this time regarding ultimate financial responsibility. This situation is an example of: A. An $3 billion expense to be recorded in the income statement during the year of the suit. B. A loss contingency that should be disclosed in the notes to Beasley's financial statements. C. An estimated liability that must appear in Beasley Mason Company's balance sheet. D. None of these. No accrual or disclosure is required in Beasley's financial statements.

A loss contingency that should be disclosed in the notes to Beasley's financial statements.

All of the following are characteristics of current liabilities except: A. They may be replaced with a new short-term liability rather than being paid in cash. B. They may involve estimated amounts. C. They are due within one year or within the operating cycle, whichever is longer. D. All three of the above are characteristic of current liabilities.

All three of the above are characteristic of current liabilities

Which of the following statements is true of liabilities? A. Accounts payable are listed in the current liabilities section in alphabetical order by vendor. B. Classification of current liabilities is important because of the liquidity concept. C. Current liabilities are listed in order of decreasing amounts in the current liability section of the balance sheet. D. The accounting principles followed in the U.S. differ from those of other countries; this is especially true for current liabilities.

Classification of current liabilities is important because of the liquidity concept.

Which of the following statements regarding contingencies is true? A. Contingencies that are probable and estimable must be recorded before the outcome of future events B. Contingent assets, if probable and estimable, are treated in much the same way as contingent liabilities. C. The accounting principle that determines whether a contingent asset is recorded is that of materiality. D. Contingencies that are not estimable should not be disclosed even if probable

Contingencies that are probable and estimable must be recorded before the outcome of future events

Which of the following statements regarding contingencies is true? A. Contingencies that are probable and not estimable appear on the balance sheet. B. Contingencies that are probable and not estimable are disclosed in the notes to the financial statements. C. Contingencies that are remote but estimable are disclosed in the notes to the financial statements D. Contingent assets are recorded on the balance sheet, but not in the notes to the financial statements.

Contingencies that are probable and not estimable are disclosed in the notes to the financial statements.

On November 1, Greenfield Corporation borrowed $55,000 from a bank and signed a 12%, 90-day note payable in the amount of $55,000. If you assume 360 days in year, the November adjustment will: A. Increase Interest Expense $550 and decrease Cash $550. B. Increase Discount on Notes Payable $1,100 and increase Interest Payable $1,100. C. Increase Interest Expense $550 and increase Interest Payable $550. D. Increase Interest Expense $550 and increase Notes Payable $550.

Increase Interest Expense $550 and increase Interest Payable $550.

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, the adjustment for this note includes a(n): A. Increase to Interest Expense for $3,200. B. Increase to Notes Payable for $1,600. C. Decrease to Cash for $4,800. D. Increase to Interest Payable for $1,600.

Increase to Interest Payable for $1,600.

On May 1, the Chris Company borrowed $30,000 from the Third Street Bank on a 1-year, 6% note. If the company keeps its records on a calendar year, which of the following increasing effects is needed on December 31? A. Interest Expense, $600. B. Interest Expense, $1,800. C. Interest Payable, $900. D. Interest Payable, $1,200.

Interest Payable, $1,200.

Which of the following statements is true with respect to long-term liabilities? A. They are obligations that will be satisfied within one year. B. An account payable is a good example of a long-term liability because it is interest-bearing. C. Long-term liabilities include bonds, other long-term liabilities and deferred income taxes. D. Accrued expenses are considered to be long-term liabilities.

Long-term liabilities include bonds, other long-term liabilities and deferred income taxes.

Which of the following statements regarding bonds payable is true? A. Generally, bonds are issued in denominations of $100. B. When an issuing company's bonds are traded in the "secondary" market, the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser. C. A debenture bond is backed by specific assets of the issuing company. D. Most bonds are term bonds, meaning that the entire principal amount will mature on a single date.

Most bonds are term bonds, meaning that the entire principal amount will mature on a single date.

Which of the following accounts is not classified as a current liability? A. Taxes payable B. Note payable, due in three (3) years C. Salaries payable D. Accounts payable

Note payable, due in three years

Which of the following would appear on the balance sheet as a current liability? A. A loss from an anticipated strike by employees. B. Potential damages from possible explosions in a fireworks factory. C. Premium offers in cereal boxes. D. The possible loss from a lawsuit.

Premium offers in cereal boxes.

Which of the following statements regarding serial bonds is true? A. They are likely to be issued by food companies. B. They have shorter lives than term bonds. C. They are strongly backed by the issuer's collateral. D. The bonds do not all mature on the same date.

The bonds do not all mature on the same date.

Which of the following statements about current liabilities is true? A. Current liabilities are listed in order of decreasing amounts in the current liability section of the balance sheet. B. The amount of current liabilities has little implication for a company's liquidity. C. The current liability section never contains any portion of long-term liabilities. D. The current ratio is defined as current assets divided by current liabilities.

The current ratio is defined as current assets divided by current liabilities.

For a given single sum invested at 8% for 4 years, how will the future value be affected if the compounding period is changed from annual to quarterly? A. The future value will decrease. B. The future value will increase. C. The future value will stay the same. D. There is not enough information to determine the impact.

The future value will increase.

To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years, you would use which type of time value of money calculation? A. The future value of a single amount. B. The present value of a single amount. C. The future value of an annuity. D. The present value of an annuity.

The present value of an annuity.

All of the following statements are true except: A. The threshold for recording items as liabilities is a lower under IFRS than under U.S. GAAP. B. The threshold for recording items as liabilities is a lower under U.S. GAAP than under IFRS. C. IFRS requires a liability to be recorded as a present value amount. D. Under U.S. GAAP, a contingent item should be recorded as a liability if the loss or outflow is probable and can be reasonably estimated.

The threshold for recording items as liabilities is a lower under U.S. GAAP than under IFRS.

All of the following statements are true except: A. U.S. standards do not require a classified balance sheet. B. IFRS require companies to present classified balance sheets. C. Under IFRS, an unclassified balance sheet based on the order of liquidity is acceptable only when it provides more reliable information than a classified one. D. U.S. standards require a classified balance sheet with liabilities in order by size or by order of liquidity.

U.S. standards require a classified balance sheet with liabilities in order by size or by order of liquidity.

If a company borrows money from its bank and the bank deducts the interest in advance, the company would record the amount of the interest deduction as A. a discount B. an expense C. a loss D. prepaid interest

a discount

You are interested in accumulating $10,000 so that you can take a cruise in 3 years. If you trying to solve for the amount that you need to invest each year, earning 6% interest compounded annually, the $10,000 represents: A. The amount to invest. B. An annuity. C. A present value. D. A future value.

a future value

Which of the following items should not appear in the long-term liability section of the balance sheet? A. Accrued income taxes B. Deferred income taxes C. Bonds payable D. Pension obligations

accrued income taxes

A bank loaned Atlas Company $10,000 on a 1-year, 6% note, but deducted the interest in advance. Atlas would show which of the following when recording the receipt of the cash? A. an increase in Cash for $9,400 B. an increase in Cash for $600 C. a decrease in Notes Payable for $10,600 D. a decrease in Notes Payable for $9,400

an increase in Cash for $9,400

Interest payable on a loan becomes a liability: A. When the borrowed money is received. B. When the note payable is issued. C. At the maturity date. D. As it accrues.

as it accrues

Bonds are a popular source of financing because A. bond interest expense is deductible for tax purposes, while dividends paid on stock are not. B. financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. C. a company having cash flow problems can postpone payment of interest to bondholders. D. the bondholders can always convert their bonds into stock if they choose.

bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

Rent owed to the landlord is a balance sheet item for Generic Products Company. How would it most likely be classified on the balance sheet? A. Current liability B. Long-term liability C. Current asset D. Owners' equity

current liability

The current portion of long-term debt is a balance sheet item for Generic Products Company. How would it most likely be classified on the balance sheet? A. Current liability B. Long-term liability C. Current asset D. Long-term liability

current liability

Which of the following is not classified as a noncurrent liability? A. Bonds payable B. Capital lease obligations C. Current portion of long-term debt D. Mortgage payable

current portion of long-term debt

Assume the current ratio is 3 to 1. Estimating the warranties expense on the period's sales would cause the current ratio to A. increase B. decrease C. be unchanged since the effects offset one another D. be unchanged since it has no effect on any current accounts

decrease

The payment of accounts payable results in a(n) A. decrease in liabilities and a decrease in assets. B. decrease in liabilities and an increase in assets. C. increase in liabilities and a decrease in owners' equity. D. decrease in liabilities and an increase in owners' equity.

decrease in liabilities and a decrease in assets.

A firm is required to estimate a liability for repairs for products sold with a warranty. If the firm's accountants later find that the estimated amount for repairs has been overstated, the correct accounting procedure is to A. make an adjustment to reduce the amount of estimate. B. make a correction because the overstatement is an error. C. show the amount of overstatement on the income statement as a loss. D. do nothing for the year in question and modify the next year's estimate.

do nothing for the year in question and modify the next year's estimate.

An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30 means that the company should pay A. $7,920 before the end of January. B. either $7,920 before January 16 or $8,000 before the end of the month. C. $8,000 between January 2 and January 16. D. $6,800 before January 16.

either $7,920 before January 16 or $8,000 before the end of the month.

If a company wishes to accumulate $500,000 in 20 years at 5% by making equal yearly deposits into an account, calculation of the deposits is an application of the A. future value of a single amount B. present value of a single amount C. future value of an annuity D. present value of an annuity

future value of an annuity

An example of a current liability that must be accrued is A. accounts payable. B. current maturity of long-term debt C. revenue received in advance. D. income taxes payable.

income taxes payable.

Assume the current ratio is 2 to 1. Payment on accrued salaries payable would cause the current ratio to A. increase B. decrease C. be unchanged since the effects offset one another D. be unchanged since it has no impact on any current accounts

increase

Assume the current ratio is 3 to 4. Purchases of inventory on account would cause the current ratio to A. increase B. decrease C. be unchanged since the effects offset each other D. be unchanged since it has no effects on any current accounts

increase

Executive, Inc. has a weekly payroll of $10,000 for a 5-day workweek, Monday through Friday. If December 31, the last day of the accounting year, falls on Thursday, Executive would make an adjustment that would A. increase Wages Expense $8,000. B. decrease Wages Payable $2,000. C. decrease Cash $8,000. D. increase Wages Payable $2,000.

increase Wages Expense $8,000.

A bank loaned Shrugg Stone Company $35,000 on a 1-year, 6% note, but deducted the interest in advance. Shrugg Stone would show which of the following to record receipt of the cash? A. increase in Cash for $35,000. B. decrease in Notes Payable for $32,900. C. increase in Discount on Notes Payable for $2,100. D. increase in Interest Revenue for $2,100.

increase in Discount on Notes Payable for $2,100.

Creek Inc. has a weekly payroll of $8,000 for a 5-day workweek, Monday through Friday. If December 31, the last day of the accounting year, falls on Wednesday, Creek would make an adjustment that would A. increase wages expense $4,800. B. decrease wages payable $4,800. C. decrease cash $4,800. D. increase wages payable $8,000.

increase wages expense $4,800.

A company's balance sheet shows the account, Notes Payable. This resulted from a loan made by the company's bank. If the end-of-year balance in the notes payable account exceeds the beginning-of-year balance by $5,000, this is shown on the cash flow statement as an A. inflow of cash of $5,000 in the operating activities category. B. outflow of cash of $5,000 in the operating activities category. C. inflow of cash of $5,000 in the financing activities category. D. outflow of cash of $5,000 in the financing activities category.

inflow of cash of $5,000 in the financing activities category.

On October 1, Lawrence Company borrowed $60,000 from Fourth National Bank on a 1-year, 7% note. If the company's fiscal year ends as of December 31, which of the following increasing effects would Lawrence show? A. interest expense, $4,200. B. notes payable, $1,050. C. interest payable, $1,050. D. prepaid interest, $3,150.

interest payable, $1,050.

Judge Inc. issues numerous discount coupons throughout the year. A balance in the Estimated Liability for Coupon Redemption A. indicates an error had been made in posting. B. should equal the same amount of coupons redeemed. C. is the amount of outstanding coupons it expects to be redeemed. D. indicates that more coupons were redeemed than estimated.

is the amount of outstanding coupons it expects to be redeemed.

The landlord records the security deposit she collects from the tenant as a(n) A. asset B. liability C. contingent liability D. contra liability

liability

A ten-year lease obligation appears on the balance sheet of Generic Products Company. How would it most likely be classified on the balance sheet? A. Current asset B. Long-term liability C. Long-term asset D. Contra-liability

long-term liability

There are some liabilities, such as income tax payable, for which the amounts must be estimated. Failure to estimate these amounts and record them would be a violation of the A. matching principle B. convention of conservation C. practice of consistency D. concept of historical cost

matching principle

Almost all current liabilities affect the operating category of the statement of cash flows, but one that does not affect cash provided by operating activities is A. accounts payable. B. interest payable. C. notes payable. D. taxes payable.

notes payable.

A convertible bond is one where A. the issuer can convert from a fixed interest rate to a floating one. B. the issuer can convert it from long-term to short-term. C. the issuer can retire the bond before its specified due date. D. the holder can convert the bond into common stock at a future time.

the holder can convert the bond into common stock at a future time.

If a company's bonds are callable, A. the investor or buyer of the bonds has the right to retire the bonds. B. the issuing company is likely to retire the bonds before maturity if the bonds are paying 9% interest while the market rate of interest is 6%. C. the bonds are never allowed to remain outstanding until the maturity date. D. the investor never knows what the redemption price will be until the bonds are actually called.

the issuing company is likely to retire the bonds before maturity if the bonds are paying 9% interest while the market rate of interest is 6%.

Using the future value table, a student found that the future value amount of $1 for 5 years at an annual interest rate of 10% is 1.611. The student also observed that the future value of $1 for 5 years at 10% compounded semiannually is 1.629. This means that A. the more often the compounding, the higher the future value. B. the student was looking in the wrong column; the second amount should be 1.611/2. C. there was an error in the table. D. when interest is compounded semiannually, more money must be deposited to have a desired ending balance.

the more often the compounding, the higher the future value.

The table factor for the future value of an annuity for 4 annual deposits at 8% is A. the same as for the future value of $1 multiplied by 4. B. the reciprocal of the future value of $1 factor for n = 4 and 8%. C. the cumulative total of the future value of $1 factors for 4 deposits at 8%. D. the same as using the future value of $1 factors at 8% for 3, 2, 1 and 0 periods.

the same as using the future value of $1 factors at 8% for 3, 2, 1 and 0 periods.

Convertible bonds are attractive to investors because A. they usually carry a higher rate of interest than non-convertible bonds. B. they carry a convertible interest rate that can be increased when the prime rate of interest increases. C. they can be converted into stock at the issuer's option. D. the issuing company cannot retire the bonds before maturity.

they can be converted into stock at the issuer's option.

Current liabilities are defined as those liabilities which will be satisfied A. by the end of the operating cycle. B. within one year. C. within one year or within the operating cycle, whichever is longer. D. within one year or within the operating cycle, whichever is shorter.

within one year or within the operating cycle, whichever is longer