Chapter 13: Current Liabilities and Contigencies
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
