Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practicing Financial Planning

Authors: Sid Mittra, Anandi P Sahu, Brian Fischer

12th Edition

9386042851, 9789386042859

More Books

Students also viewed these Accounting questions