| | Income numbers are affected by the accounting methods employed What would you pay for an investment that pays you $20,000 at the end of each year for the next twenty years? Assume that the relevant interest rate for this type of investment is 12%. | | $167,316. | | | $1,441,048. | | | $20,733. | | | $149,389. Which of the following is true? | | Rents occur at the beginning of each period of an ordinary annuity. | | | Rents occur at the end of each period of an annuity due. | | | Rents occur at the beginning of each period of an annuity due. | | | None of these answer choices are correct. According to FASB concepts statement No.6, purchase commitments include only the right to receive assets. True False Which of the following is a current liability? | | A long-term debt maturing currently, which is to be paid with cash in a sinking fund | | | A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue | | | A long-term debt maturing currently, which is to be converted into common stock | | | None of these answers are correct. Which of the following is not a factor that is considered when evaluating whether or not to record a liability for pending litigation? | | Time period in which the underlying cause of action occurred. | | | The type of litigation involved. | | | The probability of an unfavorable outcome. | | | The ability to make a reasonable estimate of the amount of the loss. How do you determine the acid-test ratio? | | The sum of cash and short-term investments divided by short-term debt. | | | Current assets divided by current liabilities. | | | Current assets divided by short-term debt. | | | The sum of cash, short-term investments and net receivables divided by current liabilities. Slack Inc. borrowed $320,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31? | | $0. | | | $38,400. | | | $25,600. | | | $28,800. Presented below is information available for Marley Company. Current Assets Cash $ 4,000 Short-term investments 65,000 Accounts receivable 61,000 Inventory 110,000 Prepaid expenses 30,000 Total current assets $270,000 Total current liabilities are $100,000. The acid-test ratio for Marley is: | | 2.80 to 1 | | | 2.40 to 1 | | | 1.30 to 1 | | | 0.69 to 1 Excom manufactures high-end whole home electronic systems. The company provides a one-year warranty for all products sold. The company estimates that the warranty cost is $225 per unit sold and reported a liability for estimated warranty costs $7.8 million at the beginning of this year. If during the current year, the company sold 60,000 units for a total of $243 million and paid warranty claims of $9,000,000 on current and prior year sales, what amount of liability would the company report on its balance sheet at the end of the current year? (assume accrual method) | | $2,800,000. | | | $4,500,000. | | | $12,300,000. | | | $13,500,000. | | | | | | | | |
