acct. 201 chapter 9

the warranties payable account appears on which of the following financial statements? a. statement of cash flows b. statement of changes in stockholders equity c. balance sheet d. income statement

c

the journal entry to recognize the issuance of a note payable includes a (select all that apply) a. debit to the notes payable account b. credit to the cash account c. credit to the notes payable account d. debit to the cash account

c, d

which of the following would be classified as a general uncertainty? (select all that apply) a. potential warranty claims b. potential loss due to legal liability c. potential decline in earnings due to competition d. potential storm damage

c, d

the current ratio is calculated by dividing ________ _______ by _______ ________.

current assets, current liabilities

the journal entry to recognize accrued interest expense includes a ________ (debit/credit) to the expense account and a ________ (debit/credit) to the interest payable account

debit, credit

the journal entry to recognize a sales event that included sales tax would require a _________ (debit/credit) to the cash account, a _________ (debit/credit) to the sales tax payable account, and a(n) ________ (debit/credit) to the sales revenue account

debit, credit, credit

when a company pays a contingent liability for warranties, the balance in the cash account _________ (increases/decreases) and the balance in the warranties payable account ___________ (increases/decreases)

decreases, decreases

when a business pays an individual for specific services, but the individual supervises and controls the work, then that individual is considered to be a(n) _______ _______.

independent contractor

bill seymour earns a monthly salary of $10,000. bill's total withholdings amount to $2000. based on this information, the journal entry to record the payment of salary expense for bill would include a a. a debit to salary expense for $10,000, a credit to various liabilities accounts for $2000 and a credit to cash for $8000 b. a debit to salary expense for $8000, a debit to payroll tax expense for $2000 and a credit to cash for $10,000 c. a debit to salary expense for $10,000, a credit to cash for $10,000 d. a debit to salary expense for $10,000, a credit to various liability accounts for $8000 and a credit to cash for $2000

a

if the likelihood of a future obligation arising is remote, a. the estimated amount is determined for managerial purposes and is not shown in the financial statements or related notes b. the estimated amount is shown as an expense on the income statement c. the estimated amount must be disclosed in the notes to the financial statements d. a liability must be reported on the balance sheet

a

simms accountants charged a client $2000 cash plus tax for services provided in a state where the service sales tax rate is 6%. as a result of this event, simms would recognize: (select all that apply) a. a $2120 increase in total assets b. $2000 of service revenue c. a $120 liability on the balance sheet d. zero cash flow from operating activities

a, b, c

pressure company issued a $10,000 face value discount note on march 1, year 1. the note had a one year term and a 9$ discount rate of interest. the journal entry to recognize the issue of the note includes a: (select all that apply) a. debit to the discount on notes payable account for $900 b. debit to the cash account for $9100 c. credit to the discount on notes payable account for $900 d. credit to the notes payable account for $10,000 e. credit to the notes payable account for $9100 f. debit to the cash account for $10,000

a, b, d

warranties normally: (select all that apply) a. guarantee repair or replacement b. have indefinite lives c. cover a specific time period d. are based on estimates

a, c, d

when a company recognizes a warranty expense: (select all that apply) a. stockholders equity decreases b. there is a cash inflow on the statement of cash flows c. total assets increase d. the statement of cash flows is not affected e. net income increases

a, d

When a company borrows money by issuing a note, the balance in the a. notes payable account increases and the cash account decreases b. notes payable account increases and the cash account increases c. notes payable account decreases and the cash account increases d. notes payable account decreases and the cash account decreases

b

jack company issued a $12,000 note payable on september 1, year 1 for a one year term. interest was set at 5% per year. in year 2, jack would recognize cash flow from operating activities amounting to a. $200 of interest expense b. $600 of interest expense c. $400 of interest expense d. zero interest expense

b

payroll tax expense is incurred by a. state and federal governments b. the employer only c. the employee only d. both the employer and the employee

b

the average time it takes a business to convert cash to inventory, inventory to accounts receivable, and accounts receivable back to cash is commonly called the _________ cycle a. financing b. operating c. investing

b

fran company recognized accrued interest expense. how would this event affect fran company's financial statements? (select all that apply) a. total liabilities decrease b. stockholders equity decreases c. total liabilities increase d. stockholders equity increases e. total liabilities are not affected f. stockholders equity is not affected

b, c

a company experienced an event that caused assets, liabilities, and cash flow from financing activities to increase, but had no affect on net income. which of the following events could have caused these effects? a. collecting the principal balance of a note receivable b. repaying the principal balance of a loan c. borrowing money with a two year term to maturity d. loaning money with a three year term to maturity

c

other things being equal, the higher a company's current ratio, the _______ (higher/lower) its liquidity

higher

on august 1, year 1, star company borrowed money from moon company. due to the december 31, year 1 adjustment to recognize accrued interest on star's books, the balance in the interest expense account __________ (increases/decreases) and the balance in the interest payable account ___________ (increases/decreases)

increases, increases

when a company recognizes a contingent liability for warranties the balance in the warranty expense account ___________ (increases/decreases) and the balance in the warranties payable account __________ (increases/decreases)

increases, increases