ADMS 3595 Study Guide - Contingent Liability, Accounts Payable, Accrued Interest
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YORK UNIVERSITY Name _____________,_________________
SCHOOL OF ADMINISTRATIVE STUDIES (Last) (First)
Professor Sung Kwon (Course Director) and Ms. Trish Farrell
ADMS 3595 I.D. # ______________________________
Intermediate Financial Accounting II
EXAM I, Winter 2012 Section ______________________________
Type Points Available Points Earned
I. Multiple Choice 30 @ 2 = 60 _____________
II. Premiums 11 _____________
III. Bonds Payable 14 _____________
IV. Taxable income and Deferred Tax 15 _____________
1. Check exam carefully to be sure you have all thirteen pages.
2. When you are instructed to begin the exam, put your name and student I.D. number on this
cover sheet and indicate your section number.
3. You have 120 minutes to complete the exam.
4. Please fill in a scantron form with a pencil only.
5. Show your calculations and work to support your answers for problem questions.
6. Write in pen or pencil neatly because if we cannot understand what you have written, we
cannot give you marks.
7. The exam is closed-book, and you can use only nonprogrammable calculators (i.e., no
laptop/pocket computers are allowed) into the exam room.
8. When the end of the exam is announced, stop writing and turn your exam over immediately.
I. Multiple Choices Questions: (30 @ 2 points). Circle the best answer and copy it to your
SCANTRON form. Only your answers on the SCANTRON form will be graded.
1. According to the Exposure Draft of Proposed Amendments to IAS 37, Provisions,
Contingent Liabilities and Contingent Assets
a. Only conditional obligations are recorded.
b. Liabilities must have measurement certainty.
c. The term “contingent liabilities” is eliminated.
d. A conditional obligation related to an unconditional obligation is not recognized.
2. Which of the following liabilities is NOT a financial liability?
a. Income taxes payable.
b. Accounts payable.
c. Notes payable.
d. Both a) and b).
3. A liability is classified as current under IFRS if,
a. It is not expected to be settled in the entity’s normal operating cycle.
b. It is held primarily for trading.
c. It is due more than 12 months from the end of the reporting period.
d. The entity has an unconditional right to defer its settlement for at least 12 months after
the balance sheet date.
4. Which of the following is NOT part of the definition of a trade accounts payable?
a. a balance owed to others for goods, supplies or services.
b. an amount related to the entity’s ordinary business activities.
c. a good, supply or service purchased on open account.
d. an amount related to the owner’s personal activities.
5. Which of the following dividends are recognized in the accounting records as a liability?
a. Accumulated but undeclared dividends on cumulative preferred shares.
b. Stock dividends.
c. Cash dividends.
d. Both a) and c).
6. As of July 1, 2010, businesses in Ontario should record what entry on the purchase of
taxable goods and services?
a. A debit to HST recoverable for the amount of the HST paid.
b. An increase to the cost of the item acquired by the GST paid.
c. Credit HST payable for the amount of the HST charged on sales.
d. An increase to the cost of the item acquired by the PST paid.
7. Accumulating rights to benefits (for employees)
a. Are often mandated by provincial labour law.
b. Include vested rights that do not depend on the employee’s continued service.
c. Are rights that accrue with employee service.
d. All of these statements are correct.
8. ABC Corporation has a bonus plan with their senior executives which pays the
management group bonuses of 12% based on profits after deducting the bonus but before
deducting income taxes. ABC Corporation earned $300,000 in 2012 and pays tax at 40%.
What is the amount of the bonus for 2012?
9. Harold’s Auto Sales uses the expense approach to account for warranties. They sell a used
car for $15,000 on Oct 25, 2011, with a one year warranty covering parts and labour.
Warranty expense is estimated at 2% of the selling price, and the appropriate adjusting
entry is recorded at Dec 31, 2011. On March 12, 2012, the car is returned for warranty
repairs. This cost Harold $100 in parts and $60 in labour. When recording the March 12,
2012 transaction, Harold would debit Warranty Expense with
a. $ 0
b. $ 60.
10. Presented below is information available for Lozell Company.
Cash $ 4,000
Marketable securities 75,000
Accounts receivable 61,000
Prepaid expenses 30,000
Total current assets $280,000
Total current liabilities are $80,000. To two decimals, the acid-test ratio for Lozell is
11. Under current IFRS requirements, a contingent liability is recognized if
a. the amount of the loss can be reliably estimated and it is probable that an asset has been
impaired or a liability incurred as of the financial statement date.
b. the amount of the loss cannot be measured reliably but it is probable that an asset has
been impaired or a liability incurred as of the financial statement date.
c. it relates to a lawsuit commenced after the balance sheet date, the outcome of which
can be reliably measured.
d. it relates to an asset recognized as impaired after the balance sheet date.
Professor sung kwon (course director) and ms. trish farrell. Type points available points earned: multiple choice. Circle the best answer and copy it to your. Only your answers on the scantron form will be graded. According to the exposure draft of proposed amendments to ias 37, provisions, Contingent liabilities and contingent assets: only conditional obligations are recorded, liabilities must have measurement certainty, the term contingent liabilities is eliminated, a conditional obligation related to an unconditional obligation is not recognized. Which of the following liabilities is not a financial liability? a: accounts payable, notes payable, both a) and b). A liability is classified as current under ifrs if, a. b. c: the entity has an unconditional right to defer its settlement for at least 12 months after. It is not expected to be settled in the entity"s normal operating cycle. It is due more than 12 months from the end of the reporting period. the balance sheet date.