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ADMS 3595 (10)
Lecture

ch13.doc

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Department
Administrative Studies
Course
ADMS 3595
Professor
Rebecca Jubis
Semester
Fall

Description
CHAPTER 13 CURRENT LIABILITIES AND CONTINGENCIES IFRS questions are available at the end of this chapter. TRUE-FALSE Conceptual Answer No. Description F 1. Zero-interest-bearing note payable. F 2. Dividends in arrears. T 3. Examples of unearned revenues. T 4. Reporting discount on Notes Payable. F 5. Currently maturing long-term debt. F 6. Excluding short-term debt refinanced. T 7. Accounting for sales tax collected. F 8. Accounting for sick pay. T 9. Social security taxes as liabilities. F 10. Definition of accumulation rights. T 11. Recognizing compensated absences expense. F 12. Accruing estimated loss contingency. T 13. Disclosing gain contingencies. F 14. Sales-type warranty profit. T 15. Fair value of asset retirement obligation. T 16. Reporting a litigation liability. F 17. Expense warranty approach. F 18. Acid-test ratio components. F 19. Affect on current ratio. T 20. Reporting current liabilities. MULTIPLE CHOICE Conceptual Answer No. Description d 21. Definition of a liability. d 22. Nature of current liabilities. a 23. Recording of accounts payable. a 24. Classification of notes payable. b 25. Classification of discounts on notes payable. d 26. Identify current liability. c 27. Bonds reported as current liability. d 28. Identify item which is not a current liability. c 29. Dividends reported as current liability. d 30. Classification of stock dividends distributable. c 31. Identify item which is not a current liability. d 32. Identify current liability. c 33. Characteristic of current liability. d 34. Definition of a liability. b 35. Importance of liability section of balance sheet. a 36. Current liabilities and operating cycle. 13 - 2 Test Bank for Intermediate Accounting, Thirteenth Edition MULTIPLE CHOICE Conceptual (cont.) Answer No. Description a 37. Present value and concept of a liability. c 38. Zero-interest-bearing notes payable. d 39. Callable debt reporting. d 40. Condition to exclude short-term obligation. a 41. Ability to consummate refinancing of short-term debt. b 42. Disclosure of preferred dividends not declared. c 43. Example of unearned revenue. d 44. Short-term obligations expected to be refinanced. d 45. Ability to consummate refinancing of short-term obligations. d 46. Determine what is a liability. a 47. Classification of sales taxes. d S48. Disclosure for short-term debt refinanced. b S49. Vested rights vs. accumulated rights. d P50. Deductions in computing net pay. d 51. Employer's payroll tax expense. d 52. Accrual of a liability for compensated absences. c 53. Accrual of a liability for compensated absences. d 54. Accrual of a liability for compensated absences. d 55. Compensated absences. d 56. Requirements for compensated absences accrual. b 57. Condition for sick pay accrual. c 58. Payroll tax deduction. d 59. Definition of a contingency. b 60. Recording contingent liability. a 61. Example of contingent liability. d 62. Recording contingent liability. d 63. Disclosure of a gain contingency. d 64. Disclosure of contingencies. b 65. Accrual of loss contingency. a 66. Litigation and loss contingencies. c 67. Accrual of a contingent liability. d 68. Source of a contingent liability. b 69. Asset retirement obligation. c 70. Asset retirement obligation. c 71. Classification of warranty liability. c 72. Liability accrual due to governmental action. a 73. Accrual of product warranties. b P74. Determining loss amount to report. d S75. Reporting lawsuit loss and liability. d S76. Accrual method for warranty costs. c 77. Accrual warranty method. d 78. Cash-basis warranty method. a 79. Characteristic of expense warranty approach. b 80. Accounting for discount coupon. a 81. Condition to recognize asset retirement obligation. b 82. Recording liability for pending litigation. d 83. Computation of acid-test ratio. c 84. Current ratio information. Current Liabilities and Contingencies 13 - 3 MULTIPLE CHOICE Conceptual (cont.) Answer No. Description c S85. Presentation of current liabilities. a P86. Current ratio formula. d 87. Disclosure of accrued liabilities. d 88. Acid-test ratio elements. d 89. Items included in current ratio and acid-test ratio. PThese questions also appear in the Problem-Solving Survival Guide. SThese questions also appear in the Study Guide. MULTIPLE CHOICE Computational Answer No. Description b 90. Adjusting entry involving discount on short-term note payable. d 91. Calculate effective interest on discounted note. a 92. Calculate cost of inventory purchase. d 93. Calculate interest expense. b 94. Calculate interest expense. c 95. Reporting 5-year note in financial statements. b 96. Calculate unearned revenue. d 97. Calculate amount of sales tax payable. b 98. Determine amount of short-term debt to be reported. d 99. Determine amount of short-term debt to be reported. b 100. Calculate sales taxes for the month. b 101. Calculate amount of sales taxes payable. c 102. Determine amount of sales subject to sales tax. a 103. Short-term debt to be excluded. a 104. Short-term debt to be excluded. d 105. Federal/state unemployment taxes. d 106. Federal/state unemployment taxes. c 107. Vacation liability accrual. c 108. Vacation liability accrual. c 109. Calculate payroll tax expense. d 110. Calculation of vacation expense to be recognized. a 111. Calculation of accrued liability to be recognized for compensated balances. d 112. Effect of payroll taxes on assets / liabilities. a 113. Record vacation liability accrual. b 114. Record loss contingency amount. d 115. Record asset retirement obligation. d 116. Calculate extended warranty contract profit. c 117. Calculate warranty liability. b 118. Calculate rebate expense and liability. d 119. Asset retirement obligation. a 120. Calculate insurance expense and loss. b 121. Calculate rebate expense and liability. d 122. Asset retirement obligation. d 123. Calculate warranty liability. 13 - 4 Test Bank for Intermediate Accounting, Thirteenth Edition MULTIPLE CHOICE Computational (cont.) Answer No. Description b 124. Calculate liability for premiums. d 125. Calculate warranty liability. b 126. Calculate liability for premiums. d 127. Determine premiums expense for the year. d 128. Calculate estimated liability for premiums. d 129. Calculate estimated liability for premiums. b 130. Determine amount to accrue as a loss contingency. d 131. Accrue warranty expense for the year. a 132. Calculate warranty liability. d 133. Determine amount to accrue as a gain contingency. b 134. Calculate liability for unredeemed coupons. c 135. Calculate the quick (acid-test) ratio. MULTIPLE CHOICE CPA Adapted Answer No. Description a 136. Knowledge of accounts payable. b 137. Determine current and long-term portions of debt. c 138. Determine accrued interest payable. d 139. Determine amount of short-term debt to be reported. a 140. Calculate accrued salaries payable. d 141. Accrual of payroll taxes. b 142. Calculate unearned service contract revenue. c 143. Determine liability from unredeemed trading stamps. d 144. Determine range of loss accrual. d 145. Calculate the estimated warranty liability. c 146. Disclosure of a casualty claim. EXERCISES Item Description E13-147 Notes payable. E13-148 Payroll entries. E13-149 Compensated absences. E13-150 Contingent liabilities. E13-151 Premiums. E13-152 Premiums. PROBLEMS Item Description P13-153 Accounts and notes payable. P13-154 Refinancing of short-term debt. P13-155 Premiums. P13-156 Warranties.
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