Chapter 9 Smartbook

______ are amounts owed to suppliers for products or services purchased on credit.

Accounts payable

Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. The entry to record this cash receipt would include the following entries? (Check all that apply.)

Credit to Unearned Paving Fees Debit to Cash

A liability created by buying goods or services on credit is typically recorded to

Field 1: accounts Field 2: payable

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

Sales tax payable

Amounts received in advance from customers for future products or services are typically recorded in a liability account called

Unearned Revenues

______ is when an employer provides employees with a percentage of the company's net income earned during the year.

bonus plan

Which of the following represent reasonably possible contingent liabilities?

debt guarantees potential legal claims

A measurable obligation arising from agreements, contracts, or laws is called a ---------liability.

known

A measurable obligation arising from agreements, contracts, or laws is called a-------- liability.

known

A(n) (asset/liability/revenue)--------is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

liability

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n)

liability

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n)

liability

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) ----------account.

liability

In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be (probable/reasonably possible/remote)

probable

A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a

short-term note payable

Spot Co. purchases office supplies from Sally Supplies, Inc.. Spot does not pay cash for the purchase, and now owes the amount to Sally. This transaction would typically be recorded in which account in Spot's books?

Accounts Payable

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) Blank______ account.

liability

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except:

warranties.