M.G.H Connect: Smartbook Chpt 9

The current ratio and working capital are financial measures of Blank______. -return on investment -assets and liabilities -equity -profitability -liquidity

liquidity

Acme Enterprises began the new year owing its suppliers $3,000 for merchandise purchased last year. Acme then sold half of this merchandise for $5,000 on account. Two weeks later, Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account. Acme now has an Accounts payable balance of Blank______. -$5,500 -$11,000 -$4,500 -$1,000 -$6,000

$6,000

The entry to record the purchase of equipment that requires a $10,000 payment in 2 years includes a Blank______. The market rate of interest is 9% compounded annually. (Check all that apply.) -$8,417 debit to Equipment -$10,000 credit to Notes Payable -$17,591 debit to Equipment -$17,591 credit to Notes Payable -$10,000 debit to Equipment -$8,417 credit to Notes Payable

$8,417 debit to Equipment $8,417 credit to Notes Payable

Which financial statements are needed in order to calculate the accounts payable turnover ratio? (Check all that apply.) -Statement of cash flows -Management's responsibility report -Statement of retained earnings -Income statement -Balance sheet

-Income statement -Balance sheet

Issuing a note payable for cash results in a(n) Blank______. -decrease in assets and a decrease liabilities -increase in assets and an increase in liabilities -increase in liabilities and a decrease in stockholders' equity -decrease in assets and an increase in liabilities

-increase in assets and an increase in liabilities

During 2021, Barry Bees, Inc.'s Sales equal $30,000 and Cost of goods sold equals $10,000. Its December 31, 2020 Accounts payable was $800 and its December 31, 2021 Accounts payable is $1,200. Barry Bee's accounts payable turnover equals Blank______ times for the year ended December 31, 2021. -10 -5 -15 -3

10

When an employee takes vacation time off, what is the impact on the accounting equation? -An increase in an asset and a decrease in stockholders' equity -A decrease in an asset and a decrease in a liability -A decrease in an asset and an increase in a liability -An increase in a liability and a decrease in stockholders' equity -A decrease in one asset with an increase in another asset

A decrease in an asset and a decrease in a liability

Which of the following are long-term liabilities? (Check all that apply.) -Accounts payable -Bonds payable -Notes payable due in 3 years -Notes payable due in 6 months -Private placement of debt due in 3 years

Bonds payable Notes payable due in 3 years Private placement of debt due in 3 years

When an employee goes on vacation and uses up a portion of the accrued liability, the company journal entry includes: -Credit accrued vacation liability -Debit accrued vacation liability -Credit cash -Debit compensation expense -Credit compensation expense

Debit accrued vacation liability Credit cash

When an employee goes on vacation and uses up a portion of the accrued liability, the company journal entry includes: -Debit accrued vacation liability -Credit compensation expense -Credit cash -Credit accrued vacation liability -Debit compensation expense

Debit accrued vacation liability Credit cash

Which of the following may be classified as contingent liabilities? -Unearned revenues -Deposits from customers -Environmental problems -Future litigation losses -Product warranties

Environmental problems Future litigation losses Product warranties

When a company leases an asset, the party that owns the asset is referred to as the___________________and the party pays for the right to use the asset is referred to as the_____________________.

Lessor, Lessee

What kind of account is deferred (or unearned) revenue? -Expense account -Liability account -Revenue account -Asset account

Liability account

XYZ borrowed $50,000 this year. Half of the loan will be repaid next year and the remainder will be paid the following year. How will the $50,000 be reported on its balance sheet at the end of this year? (Check all that apply.) -Long-term debt of $25,000 -Long-term debt of $50,000 -Current portion of long-term debt of $50,000 -Current portion of long-term debt of $25,000

Long-term debt of $25,000 Current portion of long-term debt of $25,000

Which of the following are long-term liabilities? (Check all that apply.) -Deferred revenue to be earned in 9 months -Notes payable due in 3 years -Bonds payable due in 20 years -Accounts payable -Notes payable due in 6 months

Notes payable due in 3 years Bonds payable due in 20 years

Many current liabilities have a direct relationship to the operating activities of a business. Match the operating activity on the statement of cash flows with the related current liability on the balance sheet. Instructions Purchase of inventory = ? Cash paid for employee compensation = ? Cash received in advance from customers = ? Cash paid for income taxes = ?

Purchase of inventory = Accounts payable Cash paid for employee compensation = Accrued salaries Cash received in advance from customers = Deferred revenues Cash paid for income taxes = Accrued taxes payable

Match each lease with its appropriate accounting treatment. Instructions Short-term Lease Longer-term Finance Lease Operating Lease expensed as the leased asset is used reported as a liability and meets one of the 5 criteria which is ownership is transferred at the end of the lease reported as a liability and does not meet any of the 5 criteria

Short-term Lease = expensed as the leased asset is used Longer-term Finance Lease = reported as a liability and meets one of the 5 criteria which is ownership is transferred at the end of the lease Operating Lease = reported as a liability and does not meet any of the 5 criteria

Sally Company manufactures large kitchen appliances. For the first year of purchase, the company will repair any manufacturing defect free of charge. Sally apparently sells its appliances with a______________.

Warranty

Which of the following is a guarantee that protects a customer from product defects for a specified period of time? -Promissory note -Contingency -Warranty -Sales allowance

Warranty

A finance lease is recorded as Blank______. -a current liability equal to the cash equivalent of the current years rent -rent expense in the period the leased asset is used -a noncurrent liability equal to the current cash equivalent of the future rent payments

a noncurrent liability equal to the current cash equivalent of the future rent payments

Bonds Blank______. (Check all that apply.) -allow companies to raise more debt capital than a note payable because the bonds are issued to many creditors -are sold in established markets making them liquid -are required to be held until the bonds mature

allow companies to raise more debt capital than a note payable because the bonds are issued to many creditors are sold in established markets making them liquid

A(n)_______________is a series of consecutive equal payments such as mortgage payments.

annuity

Which of the following has the highest present value? Multiple choice question. -$1 annuity compounded annually over 3 years at 5% -$1 annuity compounded annually over 3 years at 7% -$1 compounded annually over 3 years at 5% -$1 compounded annually over 3 years at 7%

$1 annuity compounded annually over 3 years at 5%

Which of the following have the same present value given a 10% interest rate compounded annually? (Check all that apply.) $1.10 one year from today $0.90 one year from today $1 today $1 one year from today

$1.10 one year from today $1 today

Analysts say that a company has________________if it has the ability to meet its current obligations. (Enter one word per blank.)

liquidity

A liability is first recorded at its cash equivalent amount, which Blank______ interest. -excludes -includes

excludes

A contract in which an owner provides a user the right to use an asset in return for periodic cash payments over a period of time is called a(n) Blank______. indenture contingent contract direct purchase plan lease

lease

Assuming no inflation, $1 invested today is worth Blank______. Multiple choice question. -less than $1 received in the future because of the devaluation concept -more than $1 received in the future because interest can be earned over time -the same as $1 received in the future because of the preservation concept -less than $1 received in the future because of the present value concept

more than $1 received in the future because interest can be earned over time

When a company borrows money from a bank and signs a formal written contract that specifies the amount borrowed, the date it must be repaid and the interest rate, the company will debit Cash and credit_____________________. (Enter one word per blank.)

note or notes, payable

A bond's maturity date is the date Blank______. -on which periodic interest payments are due -on which the bond principal will be repaid in full -the bond was issued

on which the bond principal will be repaid in full

Many current liabilities on the balance sheet, such as Accounts payable, accrued wages, and Deferred revenue, have a direct relationship to_________________activities on the statement of cash flows.

operating

If the lease results in a long-term lease liability then the lease is a(n) Blank______ lease. -operating only -operating or finance -investing -finance only

operating or finance

A short-term lease is recorded as Blank______. -rent expense in the period the leased asset is used -a current liability equal to the cash equivalent of the current years rent -a noncurrent liability equal to the current cash equivalent of the future rent payments

rent expense in the period the leased asset is used

Which of the following would result in a deferred revenue? (Select all that apply.) -sales on account -sales of subscriptions -sales collected within the discount period -sales of gift cards

sales of subscriptions sales of gift cards

Today's Fashions has a debt that has been properly reported as long-term debt before this year. Part of this debt is due this year. If Today's Fashions continues to report the current position of the debt as a long-term liability, then Blank____________. -the current ratio, which equals current assets divided by current liabilities, will be overstated -total liabilities will be understated -interest expense will be understated -net income will be overstated

the current ratio, which equals current assets divided by current liabilities, will be overstated

The journal entry to record the purchase of an asset in exchange for $100,000 due in 3 years at a market rate of interest of 12% compounded annually includes a debit to the asset in the amount of Blank______. -the future value of the $100,000 discounted at 36% for 1 period -the future value of the $100,000 discounted at 12% for 3 years -the present value of $100,000 discounted at 12% for 3 years -$100,000 -the present value of the $100,000 discounted at 36% for 1 period

the present value of $100,000 discounted at 12% for 3 years

The feature that distinguishes loss contingencies from other liabilities is the__________________that a loss will occur. (Enter one word per blank)

uncertainty, likelihood, probability, chance, potential, possibility, or assurance