Question
I need your help A contingent liability that is probable and can be reasonably estimated must be Disclosed. Paid. Recorded. Not disclosed. Travel Planners, Inc.
I need your help
A contingent liability that is probable and can be reasonably estimated must be
- Disclosed.
- Paid.
- Recorded.
- Not disclosed.
Travel Planners, Inc. borrowed $5,000 from First State Bank and signed a promissory note. What entry should Travel Planners record?
- Debit Cash, $5,000; Credit Notes Payable, $5,000.
- Debit Cash, $5,000; Credit Notes Receivable, $5,000.
- Debit Notes Payable, $5,000; Credit Cash, $5,000.
- Debit Notes Receivable, $5,000; Credit Cash, $5,000.
Which of the following is not a current liability?
- Deferred revenue to be earned in nine months.
- Current portion of long-term debt.
- An unused line of credit.
- Notes payable due in six months.
Express Jet borrows $100 million on October 1, 2021, for one year at 6% interest. For what amount does Express Jet report interest expense for the year ended December 31, 2022?
- $1.5 million.
- $6 million.
- $0.
- $4.5 million.
Suppose that Neuman Exploration Tours has filed a lawsuit against a competitor for an alleged trademark violation. At the end of the year, Neuman's attorney estimates that the company will likely win the lawsuit and be awarded between $1.5 and $2 million, with the most likely amount being $1.8 million. How much should Neuman record as a gain?
- $1.5 million.
- $0.
- $1.8 million.
- $2.0 million.
Aviation Systems sells its products with a three-year manufacturing warranty. The company's sales revenue is $600,000. Based on prior experience, the company estimates that warranty costs are 5% of sales revenue. Actual warranty costs related to these sales were $5,000 during the year. How much warranty expense should the company record this year?
- $30,000.
- $10,000.
- $25,000.
- $ 5,000.
Which of the following increases an employer's payroll costs?
- Employer's FICA contribution.
- FICA withholding from the employee.
- Federal income tax.
- State income tax.
When a product or service is delivered to a customer that previously paid in advance, the delivery is recorded as:
- A debit to a revenue and a credit to an asset account.
- A debit to an asset and a credit to a revenue account.
- A debit to a liability and a credit to a revenue account.
- A debit to a revenue and a credit to a liability account.
Which of the following is paid by both the employee and the employer?
- FICA taxes.
- State unemployment taxes.
- Federal unemployment taxes.
- Personal income taxes.
Management can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably possible, a contingent liability should be
- Reported as a liability but not disclosed.
- Neither disclosed nor reported as a liability.
- Disclosed and reported as a liability.
- Disclosed but not reported as a liability.
Assuming a current ratio of 1.0 and an acid-test ratio of 0.75, how will the borrowing of cash to be paid back in five years affect each ratio?
- Increase the current ratio and increase the acid-test ratio.
- No change to the current ratio and decrease the acid-test ratio.
- Increase the current ratio and decrease the acid-test ratio.
- Decrease the current ratio and decrease the acid-test ratio.
Management can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably likely, a contingent liability should be:
- Reported as a liability but not disclosed.
- Neither disclosed or reported as a liability.
- Disclosed and reported as a liability.
- Disclosed but not reported as a liability.
If Speedy Travel, Inc. borrows $50 million on September 1 for one year at 9% interest, how much interest expense should it record by December 31 of that same year?
- $4.5 million.
- $0.
- $1.5 million.
- $3.0 million.
On November 1, 20X1, a company signed a $200,000, 12%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 20X2. The company should report the following adjusting entry at December 31, 20X1:
- Debit interest expense and credit interest payable, $12,000.
- Debit interest expense and credit cash, $4,000.
- Debit interest expense and credit cash, $12,000.
- Debit interest expense and credit interest payable, $4,000.
Which of the following isnotdeducted from an employee's salary?
- Employee portion of insurance and retirement payments.
- FICA taxes.
- Unemployment taxes.
- Income taxes.
The current ratio is:
- Cash, short-term investments, accounts receivable, and inventory divided by current liabilities.
- Current liabilities divided by current assets.
- Cash, short-term investments, and accounts receivable divided by current liabilities.
- Current assets divided by current liabilities.
The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as
- Sales tax receivable.
- Sales tax expense.
- Sales tax revenue.
- Sales tax payable.
On November 1, 20X1, a company signed a $200,000, 12%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 20X2. What is the amount of interest expense to report in 20X2?
- $8,000
- $24,000
- $12,000
- $0
Federal and state income taxes withheld by employers from their employees' payroll are initially recorded with a credit to a(n):
- Asset.
- Revenue.
- Liability.
- Expense
In most cases, current liabilities are payable within ____ year(s), and long-term liabilities are payable more than ____ year(s) from now.
- one; ten
- one; two
- two; two
- one; one
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