Please leave quietly when finish Circle the letter of the best answer. 2 points each 1) What is true regarding royalty fees? A) Royalty fees are a minor expense for publishing companies. B) Unpaid royalty fees are a debit to royalty fee expense and a credit to unearned revenue. C) A franchise gives the franchisor the right to sell specified goods and/or services within a designated area. D) Unpaid royalty fees are recorded as a contra asset. 2) Which statement is correct? A) Unearned revenue is a non-financial liability. C) Bank overdraft is a non-financial liability. B) HST payable is a financial liability. D) Unearned subscriptions are a financial liability. 3) How are "purchase discounts lost" reported in the financial statements? A) As an increase in inventory. C) As an increase in liability. B) As a reduction of sales. D) As an expense item. 4) Which statement about contingencies is correct? A) It involves only potential economic outflows of resources. B) It is a possible condition that depends upon the outcome of a future event. C) It is an existing condition that depends upon the outcome of a future event. D) It involves uncertainty about either the timing or amount of payment. 5) A supplier sued Pneumatic Systems Inc. for $200,000 for breach of contract. Pneumatic's legal counsel believes that they will almost certainly be found liable. Based on previous results, the lawyer estimates that there is a 60% probability that the supplier will be awarded the $200,000; a 30% probability that the judgment will be $150,000; and a 10% probability that $100,000 will be conferred. Assuming that Pneumatic reports its financial results in accordance with IFRS, indicate which of the following will be the appropriate accounting treatment: A) Recognize a liability of $200,000. B) Recognize a liability of $175,000. C) Disclose the details of the contingency in the notes to the financial statements. D) Recognize an asset of $175,000.