Account True and False Questions

1.

Long-term liabilities are obligations due for a period of time greater than one year.

Question 1 options:

	True
	False

2. Current liabilities are obligations that will be paid out of current assets.

Question 2 options:

	True
	False

3. The stated or coupon rate of interest means the same thing as the effective rate of interest.

Question 3 options:

	True
	False

4. If the contract rate is higher than the market rate, the bonds will sell at discount.

Question 4 options:

	True
	False

5. A bond premium means that investors are willing to pay less for the bond than its face value.

Question 5 options:

	True
	False

6. Callable bonds are more risky for investors.

Question 6 options:

	True
	False

7. If the bonds are redeemed at a price higher than the carrying amount, a loss must be recognized.

Question 7 options:

	True
	False

8. Litigation is a common example of a contingent liability disclosed in the notes to the financial statements.

Question 8 options:

	True
	False

9. The current ratio is calculated by dividing current assets by current liabilities.

Question 9 options:

	True
	False

10. Business can incure liabilities when they receive cash before providing goods and services.Question 10 options:

	True
	False

11. A company has current assets of $30,000 and current liabilities of $23,000. The companys current ratio is .76 to 1.Question 11 options:

	True
	False

12. Accrued interest due on long-term notes payable should be recorded as current liabilitites.Question 12 options:

	True
	False

13. In order to comply with the matching principle, and make sure our financial statements are as accurate as possible, we must recognize warranty expense when defective product has been repaired or replaced.Question 13 options:

	True
	False

14. Estimates of the value of an asset or the amount due on a liability are not allowed under GAAP accounting.Question 14 options:

	True
	False

15. When a company deposits (or pays) sales tax collected from its customers to the government, the entry to record this deposit will credit sales taxes payable and debit cash.Question 15 options:

	True
	False