Chapter 13: Current Liabilities and Contingencies

considered to clarify financial statement elements at the reporting date.

Events occurring between the end of the fiscal year and the date the financial statements are issued or available to be issued should be

The gain is realized.

Gain contingencies usually are recognized in the income statement when:

current assets

Generally, a current liability is expected to be satisfied from _____ _____

decrease

If a liability is classified as current, rather than noncurrent, the company's working capital will ______.

Disclosed only

If the amount of future loss cannot be reasonably estimated it must be _______

operating activities section

In the statement of cash flows, interest paid typically is reported in the

current

The amount accrued for future compensated absences is based on employees' ______ salary or wages.

Reasonably possible

The chance that the confirming event will occur is more than remote but less than likely

Remote

The chance that the confirming event will occur is slight

Accrue

if the amount of future loss can be reasonably estimated it must be _________

Probable

Confirming event is likely to occur

an expected cash flow approach

Consistent with SFAC No. 7, long-term contingent liabilities should be measured using

revenue

Costs incurred to satisfy customer claims under an extended warranty period are recorded during the same period as the related _____

fringe benefits

Employer-paid contributions to employees' insurance premiums and contributions to retirement income plans typically are referred to as

during the year of sale.

The costs of satisfying product-related warranties should be recorded as an expense:

higher than

The effective interest rate on a noninterest bearing loan is _____ the stated rate.

Long-Term contingent liabilities

The expected cash flow approach is the appropriate method for estimating

True

True or false: Companies can ignore the interest component of advanced payments if the period between payment and delivery is less than one year.

The business has the intent and the ability to refinance the obligation on a long-term basis.

Under U.S. GAAP, liabilities payable within one year can be excluded from current liabilities only if:

probable

Under both U.S. GAAP and IFRS, contingent gains are disclosed when their future realization is

the employer

Unemployment taxes and matching FICA must both be paid by

Contingent Liabilities

Warranties that assure the customer that the products are delivered free from major defects typically result in the accrual of

pledging

When accounts receivable serve as collateral for a loan, we refer to the arrangement as ______ accounts receivable.

Life insurance Health insurance coverage Paid vacation

Which of the following are generally referred to as fringe benefits? (Select all that apply.)

Federal taxes FICA contributions

Which of the following must employers by law withhold from their employees' pay?