1.Known liabilities of uncertain amounts should be : a) Reported on the income statement b) Described in the notes to the financial statements c) Ignored ; record them when paid d) Estimated and accrued when they occur 2.On January 1,2010 , you borrowed $ 10,000 on a five year , 8% note payable. At December 31, 2010 you should record a journal entry that includes which of the following ? a) Note payable of $10,000 b) Nothing ; the note has already been recorded c) Interest payable of $800 d) Cash receipt of $10,000 3.What is the term used to describe an unsecured bond? a) Callable bond b) Mortgage bond c) Debenture bond d) Serial bond 4.Bonds issued at a premium always have ; A) Interest expense less than the interest payments. B) Interest expense equal to interest payments C) Interest expense greater that the interest payments D) None of the above 5.A company recognizes a lease as a capital lease when: a) The lease transfers title of the leased asset to the lessee at the end of the lease term . b) The lease term is less than 75 % of the estimated useful life of the leased asset . c) The lease has no option to purchase the asset at the end of lease term . d) The present value of the lease payments is less than 90% of the market value of the leased asset. 6.The majority of a company's liabilities are estimated liabilities: A) True B) False 7.Notes payable would be an example of known liability: A) True B) False 8.A contingent liability arises because of a past events , but is dependent upon future event. A) True B) False 9.Which of the following would be considered an estimated liability? a) Pending litigation b) Sales tax payable c) Notes payable d) Warranties payable 10.Which of the following would be considered a contingent liability ? A) Federal income tax payable B) Pending litigation C) Warranties payable D) Contingency payable 11.Current liabilities are expected to be settled within : a) 1 year b) More than 1 year c) 3 months d) 6 months 12.A company receives a note payable for $3500 at 9 % for 45 days. How much interest (to the nearest cent ) will the customer owe using a 360-day year? a) $ 315.00 b) $39.38 c) $38.84 d) $ 354.38 13.If a liability is not properly classified , it will have an effect on the : a) Total dollars of liabilities b) Both the quick and current ratio c) Quick ratio d) Current ratio