acct 1201 - ch. 9 learnsmart

The current ratio and working capital are financial measures of ______.

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 ______.

$6,000; $3,000 - 1,000 + 4,000 = $6,000.

Which of the following have the same present value given a 10% interest rate compounded annually?

(O) $1.10 one year from today (X) $0.90 one year form today (X) $1 one year from today (O) $1 today

Which of the following are long-term liabilities? 2

(O) Notes payable due in 3 years (X) Accounts payable (X) Deferred revenue to be earned in 9 months (O) Bonds payable due in 20 years (X) Notes payable due in 6 months

When using a calculator or Excel to calculate the present value, you need to know which of the following?

(O) Payment amount(s) (X) Whether it is a lease or bond (O) Number of periods (X) Whether it is temporary or permanent (O) Interest rate (O) Whether it is an annuity or single amount

Which of the following are long-term liabilities?

(O) Private placement of debt due in 3 years (O) Notes payable due in 3 years (X) Notes payable due in 6 months (O) Bonds payable (X) Accounts payable

Which of the following would result in a deferred revenue?

(O) sales of subscriptions (X) sales collected within the discount period (O) sales of gift cards (X) sales on account

Which of the following factors will result in a higher present value of $1?

(X) A higher interest rate (O) A compounding of interest less frequently (X) A compounding of interest more frequently (O) A lower interest rate

Which of the following may be classified as contingent liabilities?

(X) Deposits from customers (O) Product warranties (O) Environmental problems (O) Future litigation losses (X) Unearned revenues

Which of the following are examples of annuities?

(X) Note payable with interest and principal due in 3 months (X) The present value of $1 received 3 years from today (O) Mortgage payments (O) Car payments

Which of the following are payroll deductions from an employee's gross earnings?

(X)P State unemployment tax (SUTA) (O) Federal income tax (O) FICA tax (O) Medicare (X) Federal unemployment tax (FUTA)

The entry to record the purchase of equipment that requires a $10,000 payment in 2 years includes a ______. The market rate of interest is 9% compounded annually

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

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?

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

On November 1, 2018, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2019. The journal entry on November 1, 2018 would include which of the following?

- Debit to Cash for $100,000 - Credit to Note payable for $100,000

Bonds ______.

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

Payroll deductions ______.

- decrease the amount of cash an employee receives - are amounts subtracted from employees' gross earnings to determine their net pay

During 2019, Barry Bees, Inc.'s Sales equal $30,000 and Cost of goods sold equals $10,000. Its December 31, 2018 Accounts payable was $800 and its December 31, 2019 Accounts payable is $1,200. Barry Bee's accounts payable turnover equals ______ times for the year ended December 31, 2019.

10; Accounts payable turnover = Cost of Goods Sold/Average Accounts Payable or $10,000/(($800 + $1,200)/2)

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. Purchase of inventory

Accounts Payable

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. Cash paid for employee compensation

Accrued salaries

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. Cash paid for income taxes

Accrued taxes payable

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. Cash received in advance from customers

Deferred revenues

True or false: An annuity is a series of unequal payments made at the same time each period.

False

When using a calculator or Excel to compute the present value of $500 monthly payments over 3 years at 12%, the rate (I/YR), the number of periods (N) and payment amount (PMT) to input are ______.

I/YR=0.01; N=36; PMT=--500

When using a calculator or Excel to compute the present value of $10,000 annual payments over 10 years at 6%, the rate (I/YR), the number of periods (N) and payment amount (PMT) to input are as follows ______.

I/YR=0.06; N=10; PMT=-10000

What kind of account is deferred (or unearned) revenue?

Liability account

Which of the following is a guarantee that protects a customer from product defects for a specified period of time?

Warranty

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

annuity

If the going rate of interest is 10%, which has the greater present value?

$1 received today; Receiving $1 today is greater than receiving $1.08 in 2 years at 10%. Investing $1 today should grow to $1.10 (=$1 x 1.10) in 1 year at 10% interest rate.

Cellem, Inc.'s Beginning Accounts Payable is $4,000 and its Ending Accounts Payable is $2,000. The accounts payable turnover is 6. Cost of Goods Sold must equal ______.

$18,000; The accounts payable turnover of 6 equals Cost of Goods Sold divided by Average Accounts Payable of $3,000. Cost of Goods Sold equals 6 times $3,000 = $18,000.

Analysts say that a company has if it has ______ the ability to meet its current obligations.

liquidity

A liability is first recorded at its cash equivalent amount, which ______ interest.

excludes

Issuing a note payable for cash results in a(n) ______.

increase in assets and an increase in liabilities

A ______ is a contractual arrangement in which an owner provides a user the right to use an asset for a specified period of time.

lease

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) ______.

lease

Assuming no inflation, $1 invested today is worth ______.

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 ______ ______.

notes payable

A bond's maturity date is the date ______.

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

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

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 ______.

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 ______.

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.

uncertainty

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