ACG 2021 Study Guide - Final Guide: Double Taxation, Initial Public Offering, S Corporation

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emeraldalpaca271

7 Dec 2013

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Commercial paper: borrowing from another company rather than from a bank. Contingencies: uncertain situations that can result in a gain or a loss for a company. Contingent liability: an existing uncertain situation that might result in a loss. Current liabilities: debts that, in most cases, are due within one year. However, when a company has an operating cycle of longer than a year, its current liabilities are defined by the length of the operating cycle, rather than by the length of one year. Current portion of long-term debt: debt that will be paid within the next year. Liability: a present responsibility to sacrifice assets in the future due to a transaction or other event that happened in the past. Line of credit: an informal agreement that permits a company to borrow up to a prearranged limit without having to follow formal loan procedures and prepare paperwork. Notes payable: written promises to repay amounts borrowed plus interest.

Related Questions

Match the following:

1. Acid-test ratio

2. Current portion of long-term debt

3. Recording a contingent liability

4. Commercial paper

5. Deferred revenues

6. Line of credit

7. Accrual accounting

8. Interest expense

9. The riskiness of a business's obligations

10. Disclosure of a contingent liability

A Cash, short-term investments, and accounts receivable alldivided by current liabilities.

B Loss is probable and amount is reasonably estimable.

C Gift cards

D Long-term debt maturing within one year.

E Informal agreement that permits a company to borrow up to aprearranged limit.

F Interest expense is recorded in the period interest isincurred rather than in the period interest is paid

G Loss is reasonably possible and amount is reasonablyestimable

H Incurred on a notes payable

I obligations Unsecured notes sold in minimum denominations of$25,000 with maturities up to 270 days

J Classifying liabilities as either current or long-term helpsinvestors and creditors assess this.

amaranthwasp103

1, Commonly, current liabilities are payable within one year and long-term liabilities are payable more than one year from now. True or False

2, Given a choice, most companes would prefer to report a liability as current rather than long-term because it may cause the firm to appear less risky T or F

3, If company borrows from another company rather than from a bank, the note is referred to as commercial paper. T or F

4, Sales taxes collected from customers by seller are not an expense, instead they represent current liabilities payable to the govermant T or F

5, The balance in the estimated warranty liability account is always equal to warranty expense. T or F

6, We record gain contingencies when the gain is probable and can be reasonable estimated. T or F.

7, An employee has gross earning of $1,600 and withholding of $25 for income taxes, $5 for social security taxes and $3 for medicare taxes. The employer also pays a total of $5 for social securty and $3 for medicare taxes, $12 for SUTA. What is the total cost of this employer to the employer? Assume no other infomation.

coppercaribou27

Identification of Current Liabilities, Contingencies, andCommitments LO3 P 1. Listed below are common types of currentliabilities, contingencies, and commitments:

a. Accounts payable

b. Bank loans and commercial paper

c. Notes payable
d. Dividends payable

e. Sales and excise taxes payable

f. Current portion of long-term debt

g. Payroll liabilities

h. Unearned revenues

i. Income taxes payable

j. Property taxes payable

k. Promotional costs

l. Product warranty liability

m. Vacation pay liability

n. Contingent liability

o. Commitment

Required

1. For each of the following statements, identify the categoryabove to which it gives rise or with which it is most closelyassociated:

1. A company agrees to replace parts of a product ifthey fail.

2. An employee earns one day off for each monthworked.

3. A company signs a contract to lease a buildingfor five years.

4. A company puts discount coupons in thenewspaper.

5. A company agrees to pay insurance costs foremployees.

6. A portion of a mortgage on a building is due thisyear.

7. The board of directors declares a dividend.

8. A company has trade payables.

9. A company has a pending lawsuit against it.

10. A company arranges for a line of credit.

11. A company signs a note due in 60 days.

12. A company operates in a state that has a sales tax.

13. A company earns a profit that is taxable.

14. A company owns buildings that are subject to propertytaxes.

2. Of the items listed from a to o above, which oneswould you not expect to see listed on the balance sheet with adollar amount? Of those items that would be listed on the balancesheet with a dollar amount, which ones would you con- sider toinvolve the most judgment or discretion on the part ofmanagement?

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ACG 2021 Study Guide - Final Guide: Double Taxation, Initial Public Offering, S Corporation

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