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?