ACCT 305 ACCT305 Chapter 13 Quiz Answers
DeVry ACCT 305 ACCT/305 ACCT305 Chapter 13 Quiz
- The essential characteristics of a liability do not include:
- Of the following, which usually would not be classified as a current liability
- Which of the following results in an accrued liability?
- On November 1, Epic Distributors borrowed $24 million cash to fund an expansion of its facilities. The loan was made by WW BancCorp under a short-term line of credit. Epic issued a 9-month, 12% promissory note. Interest was payable at maturity. Epic's fiscal period is the calendar year. In Epic's adjusting entry for the note on December 31, interest expense will be:
- On October 1, 2011, Parton Industries borrowed $12 million cash to provide working capital. The loan was made by Second Bank under a short-term line of credit. Parton issued an 8-month, "noninterest-bearing note." 8% is the bank's stated "discount rate." Parton's fiscal period is the calendar year. In Parton's 2011 income statement interest expense for the note will be:
- Commercial paper has become an increasingly popular way for companies to raise funds. Which of the following is not true regarding commercial paper?
- On November 1, Shearer Shoes borrowed $18 million cash and issued a 6-month, "noninterest-bearing note." The loan was made by Third Commercial Bank whose stated "discount rate" is 9%. Shearer's effective interest rate on this loan is:
- Under U.S. GAAP, liabilities payable within one year can be excluded from current liabilities only if:
- Under IFRS, a company can demonstrate their ability to refinance long-term debt for purposes of excluding the debt from current liabilities by:
- Reunion BBQ has $4,000,000 of notes payable due on March 11, 2012, which Reunion intends to refinance. On January 5, 2012, Reunion signed a line of credit agreement to borrow up to $3,500,000 cash on a two-year renewable basis. On the December 31, 2011, balance sheet, Reunion should classify:
- Which of the following statements concerning lines of credit is untrue?
- On January 1, 2011, Yukon Company agreed to grant its employees two weeks vacation each year, with the provision that vacations earned in a particular year could be taken the following year. For the year ended December 31, 2011, all twelve of Yukon's employees earned $1,200 per week each. Eight of these vacation weeks were not taken during 2011. In Yukon's 2011 income statement, how much expense should be reported for compensated absences?
- An enterprise should accrue a liability for compensation of employees' unpaid vacations if certain conditions exist. Each of the following is a condition for accrual except:
- In its 2011 financial statements, an enterprise should accrue a liability for a loss contingency involving a possible cash payment if certain conditions exist. Each of the following is a condition for accrual except:
- Which of the following loss contingencies generally do not require accrual?
- Warren Advertising becomes aware of a lawsuit after the end of the fiscal year, but prior to the issuance of financial statements. A loss should be accrued and a liability should be reported if the amount can be reasonably estimated and:
- A loss contingency should be accrued when the amount of loss is known and the occurrence of the loss is:
- During 2011 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows:
At December 31, 2012, Green Thumb should report as a warranty liability of:
- There is a possibility of a safety hazard for a manufactured product. As yet, no claim has been made for damages, though there is a reasonable possibility that a claim will be made. If a claim is made, it is probable that damages will be paid and the amount of the loss can be reasonably estimated. This possible loss must be:
- Gain contingencies usually are recognized in the income statement when:
- Under IFRS, if every amount in a range of contingent losses is equally likely, the amount accrued is the:
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