Learning Obiective: C3 Lontingent liabilities must be recorded if The future event is peobable and the amount owed can be reasonably est B) The future event is remote c) The future event is reasonably possible. D) The amount owed cannot be reasonably estimated E) All of the above. estimated. Lsarming Objestive: C3 9. Debt guarantoes: A) Are never disclosed in the financial statements. B) Are considered to be a contingent liability. C) Are a bad business practice D) Are E) All of the above. as a liability even if i is highly likely thast the original debeor will deau C3 10. In the accounting records of a defendant, lanwsuits A) Are estimated liabilities B) Should always be recorded C) Should always be disclosed payment for damages is probable and the amount can be reasonably estimated. E) Should never be recoeded. Leaming Objective AlI If the times interest earned ratio : A) 11. Increases, then risk increases. B) Increases, then risk decreases. Is greater than 1.5, then the company is in default. D) C) Is less than 1.5, the company is carrying too little debt. E) Is greater than 1.5, the company is likely carrying too much debt Learning Objective: A Short-term notcs payable: A) Can replace an account payable B) Can be issued in retun for money borrowed from a bank. C) Are negotiable. 12. Are an unconditional promise to pay. All of the above. D) E) Learning Obiective: PI 13. The difference between the amount received from issuing a note payable and the amount repaid is referred to as: A) Interest B) Principle C) Face Valuc. D) Cash. E) Accounts Payable. Pl A short-term note payable: A) 14. ?sa written promise to pay a specified amount on a definite future date within one year or the company's operating cy whichever is longer. B) Is a contingent liability. C) Is an estimated liability D) Is not a liability until the due date E) Cannot be used to extend the payment period for an account payable