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?