ACC 201 - Chapter 10 Quiz
A company whose current liabilities exceed its current assets may have a liquidity problem.
True
Interest on a $100,000 note payable, at the rate of 6%, on a 60-day note would be:
$1,000
Sales taxes collected by a retailer are recorded as:
a credit to SALES TAX PAYABLE
If bonds are issued at a discount, it means that the:
market interest rate is higher than the contractual interest rate.
Most companies pay current liabilities:
out of current assets
Unearned Rent Revenue is:
reported as a current liability
Bonds that may be exchanged for common stock at the option of the bondholders are called:
Convertible Bonds
Notes payable usually require the borrower to pay interest.
True
Sales taxes collected from a customer by Wal-Mart are expenses:
of the customer
Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.
True
On JAN 01, BobCo borrows $100,000 from a bank by signing a $100,000, 8%, 6-month note. On JAN 01 BobCo records this transaction as:
Debit- Cash 100,000 Credit- Notes Payable 100,000
The contractual interest rate is always stated as a(n):
annual rate
Any balance in an unearned revenue account is reported as a(n):
current liability
The entry to record an installment payment on a long-term note payable is:
debit NOTE PAYABLE debit INTERET EXPENSE ... AND ... credit CASH
Secured bonds are bonds that:
have specific assets of the issuer pledged as collateral
Which of these is NOT a "Payroll Tax Expense" for businesses? (consists of FICA tax, federal unemployment tax, and state unemployment tax)
health insurance
The relationship between current liabilities and current assets is:
useful in evaluating a company's liquidity.
A $1,000 face value bond with a quoted price of 97 is selling for:
$970
A cash register tape shows cash sales of $2,500 and sales taxes of $150. The journal entry to record this information is:
Debit- Cash 2,650 Credit- Sales Revenue 2,500 Credit- Sales Tax Payable 150
Each bondholder may vote for the board of directors in proportion to the number of bonds held.
False
Which one of these payroll taxes is not a payroll tax expense of the employer?
Federal Income Tax
If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.
True
From a liquidity standpoint, it is more desirable for a company to have their:
current assets exceed current liabilities.
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that:
interest must be paid on a periodic basis regardless of earnings.
Each payment on a mortgage note payable consists of:
interest on the unpaid balance of the loan and reduction of loan principal
