Question 1

The Print Shoppe had sales on account of $4,500 which were subject to state sales tax of 9.5%.The entry to record the sales would be to:

Accepted Answer

A)  debit Accounts Receivable $4,500;credit Sales Revenue $4,500.
B)  debit Accounts Receivable $4,500;debit Sales Tax Payable $427.50;credit Sales Revenue $4,927.50.
C)  debit Accounts Receivable $4,927.50;credit Sales Revenue $4,927.50.
D)  debit Accounts Receivable $4,927.50;credit Sales Revenue $4,500;credit Sales Tax Payable $427.50.

Question 2

Contingent liabilities represent actual-NOT potential-obligations.

Accepted Answer

A) True 
 B)False

Question 3

By NOT accruing warranty expense:

Accepted Answer

A)  reported liabilities will be overstated and net income will be understated.
B)  reported expenses will be overstated and reported liabilities will be understated.
C)  reported liabilities will be understated and net income will be overstated.
D)  reported expenses will be understated and net income will be understated.

Question 4

Making a payment on an account would be journalized with a debit to Accounts Payable and credit to Cash.

Accepted Answer

A) True 
 B)False

Question 5

A $400,000 issue of bonds that sold for $363,000 matures on August 1,2015.The journal entry to record the payment of the bond on the maturity date is to:

Accepted Answer

A)  debit Cash,$400,000;credit Bonds payable,$400,000.
B)  debit Bonds payable,$400,000;credit Cash,$400,000.
C)  debit Cash,$363,000;credit Bonds payable,$363,000.
D)  debit Bonds payable,$363,000;credit Cash,$363,000.

Question 6

The amount that a borrower must pay back to the bondholders on the maturity date is the:

Accepted Answer

A)  principal.
B)  interest.
C)  stated value.
D)  market value.

Question 7

Which of the following accurately describes how contingent liabilities are reported on the Balance Sheet?

Accepted Answer

A)  Contingent liabilities are not reported.
B)  Contingent liabilities are disclosed in the footnotes only.
C)  Contingent liabilities are reported in the liabilities section.
D)  The accounting treatment for contingent liability could be A,B,or C depending on the likelihood of an actual obligation occurring.

Question 8

Bonds payable are supported by a promissory note.

Accepted Answer

A) True 
 B)False

Question 9

The debt ratio is an indicator of a company's ability to incur more debt.

Accepted Answer

A) True 
 B)False

Question 10

FUTA is paid by the employer on:

Accepted Answer

A)  the first $106,800 of an employee's earnings.
B)  the first $8,000 of an employee's earnings.
C)  the first $7,000 of an employee's earnings.
D)  all of the employee's earnings.

Question 11

Which of the following would NOT be part of an employer's payroll taxes?

Accepted Answer

A)  Federal income tax
B)  FICA
C)  FUTA
D)  SUTA

Question 12

Which of the following would be a required payroll tax for both the employee and the employer?

Accepted Answer

A)  Federal income tax
B)  FICA
C)  FUTA
D)  SUTA

Question 13

Metropolitan Masonry had sales on account of $7,200 which were subject to state sales tax of 7%.The entry to record the sales would be to:

Accepted Answer

A)  debit Accounts Receivable,$7,704;credit Sales revenue,$7,200;credit Sales tax payable,$504.
B)  debit Accounts Receivable,$7,704;credit Sale revenue,$7,704.
C)  debit Accounts Receivable,$7,200;credit Sales revenue,$7,200.
D)  debit Accounts Receivable,$7,200;debit Sales tax payable,$504;credit Sales revenue,$7,704.

Question 14

Which of the following would be treated as a rental agreement?

Accepted Answer

A)  Capital leases
B)  Operating leases
C)  Expense leases
D)  Revenue leases

Question 15

If the market rate of interest is less than the bond's stated rate of interest,the bond will be issued at:

Accepted Answer

A)  par.
B)  a premium.
C)  a discount.
D)  maturity value.

Question 16

Vintage Boutique reported Interest expense of $5,200,Income tax expense of $23,000 and Net income of $78,000.Vintage Boutique's interest coverage ratio is (rounded to two decimals) :

Accepted Answer

A)  19.42.
B)  0) 50.
C)  0) 05.
D)  20.42.

Question 17

Discount on bonds payable and Premium on bonds payable are examples of:

Accepted Answer

A)  contra-accounts.
B)  companion accounts.
C)  estimated accounts.
D)  equity accounts.

Question 18

Debenture bonds are the same as:

Accepted Answer

A)  term bonds.
B)  serial bonds.
C)  secured bonds.
D)  unsecured bonds.

Question 19

Which current liability is generally listed first?

Accepted Answer

A)  Notes payable
B)  Accounts Payable
C)  Current portions of long-term debt
D)  Accrued payables

Question 20

Unearned revenues are typically classified as current liabilities.

Accepted Answer

A) True 
 B)False

Exam 9: Current Liabilities and Long-Term Debt

A $400,000 issue of bonds that sold for $363,000 matures on August 1,2015.The journal entry to record the payment of the bond on the maturity date is to:

Correct AnswerverifiedShow Answer

Which of the following would be treated as a rental agreement?

Correct AnswerverifiedShow Answer

Discount on bonds payable and Premium on bonds payable are examples of:

Correct AnswerverifiedShow Answer

Which of the following would be a required payroll tax for both the employee and the employer?

Correct AnswerverifiedShow Answer

Bonds payable are supported by a promissory note.

Correct AnswerverifiedShow Answer

The Print Shoppe had sales on account of $4,500 which were subject to state sales tax of 9.5%.The entry to record the sales would be to:

Correct AnswerverifiedShow Answer

Which of the following accurately describes how contingent liabilities are reported on the Balance Sheet?

Correct AnswerverifiedShow Answer

The amount that a borrower must pay back to the bondholders on the maturity date is the:

Correct AnswerverifiedShow Answer

Debenture bonds are the same as:

Correct AnswerverifiedShow Answer

By NOT accruing warranty expense:

Correct AnswerverifiedShow Answer

Metropolitan Masonry had sales on account of $7,200 which were subject to state sales tax of 7%.The entry to record the sales would be to:

Correct AnswerverifiedShow Answer

Contingent liabilities represent actual-NOT potential-obligations.

Correct AnswerverifiedShow Answer

The debt ratio is an indicator of a company's ability to incur more debt.

Correct AnswerverifiedShow Answer

If the market rate of interest is less than the bond's stated rate of interest,the bond will be issued at:

Correct AnswerverifiedShow Answer

Unearned revenues are typically classified as current liabilities.

Correct AnswerverifiedShow Answer

Which of the following would NOT be part of an employer's payroll taxes?

Correct AnswerverifiedShow Answer

FUTA is paid by the employer on:

Correct AnswerverifiedShow Answer

Which current liability is generally listed first?

Correct AnswerverifiedShow Answer

Vintage Boutique reported Interest expense of $5,200,Income tax expense of $23,000 and Net income of $78,000.Vintage Boutique's interest coverage ratio is (rounded to two decimals) :

Correct AnswerverifiedShow Answer

Making a payment on an account would be journalized with a debit to Accounts Payable and credit to Cash.

Correct AnswerverifiedShow Answer

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