AFM123 Chapter Notes - Chapter 10: Current Liability, Unemployment Benefits, Income Statement

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jadeseal776

16 Apr 2018

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM123

Professor

Hector Gamez

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Importance of liabilities became apparent during the financial crisis of. Banks restricted their lending activities and suppliers tightened their credit terms. Classified balance sheets are prepared to help financial statement users know when liabilities are to be repaid. Amount reported for each liability depends on three factors: Increased (credited) when company receives good or services on credit, decreased (debited) when the company pays on its account. Liabilities for expenses that have been incurred but not yet been billed or paid at the end of the accounting period. Adjustments that are accruals, (expenses that are incurred but not yet paid, but adjusted at the end of the accounting period), the liabilities are generally referred to as accrued liabilities. Accrued liabilities relate to various unpaid expenses, including advertising, electricity, corporate income tax, interest, payroll tax, and warranties. Accrued payroll: companies record liabilities for other aspects of payroll. Amounts subtracted from employees" gross earnings to determine their net pay.

Related Questions

Bach Instruments had total assets of $560,000; total liabilities of $250,000; and total Stockholders' Equity of $310,000. Bach's debt ratio is

44.6%.

28.7%.

80.6%.

55.4%.

The entry to record selling 300 shares of stated value $60 common stock for $70 per share would be

	debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Valueâ$3,000.
	debit Cash $21,000; credit Common Stock $21,000.
	debit Cash $18,000; debit Paid-in Capital in Excess of Stated Valueâ$3,000; credit Common Stock $21,000.
	debit Cash $18,000; credit Common Stock $18,000.

The Statement of Cash Flows reports the sources and uses of cash from all of the following EXCEPT

financing activities.

managerial activities.

operating activities.

On the Income Statement, the results of discontinued operations are reported

immediately after the extraordinary items section.

before the operating income section.

as part of other income (expense).

net of income tax or net of income tax savings.

By NOT accruing warranty expense

reported expenses will be understated, and net income will be understated.

reported expenses will be overstated, and reported liabilities will be understated.

reported liabilities will be understated, and net income will be overstated.

reported liabilities will be overstated, and net income will be understated.

The adjusting entry to record incurred but not yet paid employee wages includes

	a debit to Cash.
	a debit to Wages Payable.
	a debit to Wages Expense.
	a debit to Wages Earned.

The type of stock that does NOT carry paid-in capital in excess of par is called

	par stock.
	stated value stock.
	no-par stock.
	outstanding stock.

investing activities.

What was the percentage of change in Accounts Receivable if the balance was $80,000 in 2013 and $60,000 in 2014?

	+25.00%.
	+33.33%.
	-25.00%.
	-33.33%.

In accounting, what is the meaning of capitalized?

	Capitalized means that an asset account is debited (increased) for the cost of an asset.
	Capitalized means that the cost of an asset is recorded as a debit (increase) to expense.
	Capitalized means that a given city has been selected as a government center.
	Capitalized means that a liability account is credited (increased) for the cost of an asset. please answer all the questions otherwise dont answer. TIA

ceriseturtle230

The period end adjusting entry for bad debt expense under the allowance method is

	Cash, debit; Accounts Receivable/customer name, credit.
	not required.
	Bad Debt Expense, debit; Accounts Receivable/customer name, credit.
	Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit.

Bach Instruments had total assets of $560,000; total liabilities of $250,000; and total Stockholders' Equity of $310,000. Bach's debt ratio is

44.6%.

28.7%.

80.6%.

55.4%.

The entry to record selling 300 shares of stated value $60 common stock for $70 per share would be

	debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Valueâ$3,000.
	debit Cash $21,000; credit Common Stock $21,000.
	debit Cash $18,000; debit Paid-in Capital in Excess of Stated Valueâ$3,000; credit Common Stock $21,000.
	debit Cash $18,000; credit Common Stock $18,000.

The Statement of Cash Flows reports the sources and uses of cash from all of the following EXCEPT

financing activities.

managerial activities.

operating activities.

On the Income Statement, the results of discontinued operations are reported

immediately after the extraordinary items section.

before the operating income section.

as part of other income (expense).

net of income tax or net of income tax savings.

By NOT accruing warranty expense

reported expenses will be understated, and net income will be understated.

reported expenses will be overstated, and reported liabilities will be understated.

reported liabilities will be understated, and net income will be overstated.

reported liabilities will be overstated, and net income will be understated.

The adjusting entry to record incurred but not yet paid employee wages includes

	a debit to Cash.
	a debit to Wages Payable.
	a debit to Wages Expense.
	a debit to Wages Earned.

The type of stock that does NOT carry paid-in capital in excess of par is called

	par stock.
	stated value stock.
	no-par stock.
	outstanding stock.

investing activities.

What was the percentage of change in Accounts Receivable if the balance was $80,000 in 2013 and $60,000 in 2014?

	+25.00%.
	+33.33%.
	-25.00%.
	-33.33%.

In accounting, what is the meaning of capitalized?

	Capitalized means that an asset account is debited (increased) for the cost of an asset.
	Capitalized means that the cost of an asset is recorded as a debit (increase) to expense.
	Capitalized means that a given city has been selected as a government center.
	Capitalized means that a liability account is credited (increased) for the cost of an asset.

byzantiumfly561

NEED ASAP PLEASE

Question 1

Which one of the following is not an externaluser of accounting information?

		Customers
		Investors
		Regulatory agencies
		All of these are external users

3 points

Question 2

The first step in solving an ethical dilemma is to

		identify and analyze the principal elements in thesituation.
		identify the alternatives.
		recognize an ethical situation and the ethical issuesinvolved.
		weigh the impact of each alternative on variousstakeholders.

3 points

Question 3

Generally accepted accounting principles are

		income tax regulations of the Internal Revenue Service.
		standards that indicate how to report economic events.
		theories that are based on physical laws of the universe.
		principles that have been proven correct by academicresearchers.

3 points

Question 4

Which of the following events is not a businesstransaction?

		Issuance of stock in exchange for cash.
		Hired employees.
		Incurred utility expenses for the month.
		Earned revenue for services provided.

3 points

Question 5

When assets are distributed to the owners of a corporation,these distributions are termed

		depletions.
		consumptions.
		dividends.
		a credit line.

3 points

Question 6

If total liabilities increased by $8,000, then

		assets must have decreased by $8,000.
		stockholders' equity must have increased by $8,000.
		assets must have increased by $8,000, or stockholders' equitymust have decreased by $8,000.
		assets and stockholders' equity each increased by $4,000.

3 points

Question 7

If total liabilities increased by $30,000 and stockholders'equity increased by $20,000 during a period of time, then totalassets must change by what amount and direction during that sameperiod?

		$50,000 decrease
		$10,000 decrease
		$10,000 increase
		$50,000 increase

3 points

Question 8

Misra Company compiled the following financial information as ofDecember 31:

Revenues	$ 340,000
Retained Earnings, Beginning	$ 60,000
Equipment	$ 80,000
Expenses	$ 250,000
Cash	$ 90,000
Dividends	$ 20,000
Supplies	$ 10,000
Accounts payable	$ 40,000
Accounts receivable	$ 70,000
Common Stock	$ 80,000

Misra's assets on December 31 are

		$180,000.
		$250,000.
		$360,000.
		$ 490,000.

3 points

Question 9

Mofro's Computer Repair Shop started the year with total assetsof $300,000 and total liabilities of $200,000. During the year, thebusiness recorded $500,000 in computer repair revenues, $300,000 inexpenses, and Mofro paid dividends of $50,000. Stockholders' equityat the end of the year was

		$200,000.
		$100,000.
		$250,000.
		$300,000.

3 points

Question 10

A balance sheet shows

		assets, liabilities, and stockholders' equity.
		expenses, dividends, and stockholders' equity.
		revenues, expenses, and dividends.
		revenues, liabilities, and stockholders' equity.

3 points

Question 11

At September 1, Foli Co. reported retained earnings of $136,000.During the month, Foli generated revenues of $20,000, incurredexpenses of $12,000, purchased equipment for $5,000 and paiddividends of $2,000. What is the amount of retained earnings atSeptember 30?

		$136,000
		$142,000
		$8,000
		$137,000

3 points

Question 12

Grayton Industries purchased supplies for $1,000. The Companypaid $500 in cash and agreed to pay the balance in 30 days. Thejournal entry to record this transaction would include a debit toan asset account for $1,000, a credit to a liability account for$500. Which of the following would be the correct way to completethe recording of the transaction?

		Credit an asset account for $500.
		Credit the Retained Earnings account for $500.
		Credit another liability account for $500.
		Debit the Retained Earnings account for $500.

3 points

Question 13

Radio Moscow Industries purchased supplies for $1,000. They paid$400 in cash and agreed to pay the balance in 30 days. The journalentry to record this transaction would include a debit to an assetaccount for $1,000, a credit to a liability account for $600. Whichof the following would be the correct way to complete the recordingof the transaction?

		Credit an asset account for $400.
		Credit another liability account for $400.
		Credit the retained earnings account for $400.
		Debit the retained earnings account for $400.

3 points

Question 14

A credit to a liability account

		must be accompanied by a debit to an asset account.
		indicates an increase in the amount owed to creditors.
		is an error.
		indicates a decrease in the amount owed to creditors.

3 points

Question 15

In recording business transactions, evidence that an accountingtransaction has taken place is obtained from

		business documents.
		the Internal Revenue Service.
		the public relations department.
		the SEC.

3 points

Question 16

On June 1, Leno Inc. buys a copier machine for her business andfinances this purchase with cash and a note. When journalizing thistransaction, the company's accountant will

		make a simple entry.
		use two journal entries.
		make a compound entry.
		list the credit entries first, which is proper form for thistype of transaction.

3 points

Question 17

A three column form of account is so named because it hascolumns for

		debit, credit, and balance.
		debit, credit, and date.
		debit, credit, and account name.
		debit, credit, and reference.

3 points

Question 18

The first step in designing a computerized accounting system isthe creation of the

		general ledger.
		general journal.
		trial balance.
		chart of accounts.

3 points

Question 19

Chik Chik Company showed the following balances at the end ofits first year:

Cash	$ 6,000
Prepaid insurance	$ 9,400
Accounts receivable	$ 7,000
Accounts payable	$ 5,600
Notes payable	$ 8,400
Common stock	$ 2,800
Dividends	$ 1,400
Revenues	$ 44,000
Expenses	$ 35,000

What did Chik Chik Company show as total credits on its trialbalance?

		$51,400
		$60,800
		$62,200
		$70,200

3 points

Question 20

Which of the following time periods would notbe referred to as an interim period?

		Monthly
		Quarterly
		Semi-annually
		Annually

AFM123 Chapter Notes - Chapter 10: Current Liability, Unemployment Benefits, Income Statement

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