Question

1.) An employer's entry to record payroll for the period includes:

a.) a debit to Wages Expense for the net pay.

b.)a credit to Wages Payable (or Accrued Wages) for the gross pay.

c.)a debit to Wages Payable (or Accrued Wages) for the net pay.

d.)a debit to Wages Expense for the gross pay.

2.) The borrower's entry to record accrued interest on a short-term loan is:

a.)DR Interest Receivable

CR Interest Income

b.)DR Interest Expense

CR Interest Payable

c.)DR Interest Expense

CR Interest Income

d.)DR Interest Expense

CR Cash

3.)Potential claims on a company's resources arising from such things as pending litigations, environmental hazards, casualty losses to property, and product warranties are referred to as ___________ liabilities.

a.)Callable

b.)Contingent

c.)Convertible

d.)None of the above.

4.) Bonds are often issued at a premium or discount, largely because of:

a.)market interest rate fluctuations that occur from the time the stated interest rate is established until the bonds are issued.

b.)the inability of management and investors to correctly assess the relative risks associated with the bonds being issued.

c.)the desire by management to attract institutional investors in either the premium or the discount bond markets.

d.)unrealistic stated interest rates associated with bonds that have substantially different risk profiles than management is willing to admit.

5.)An employer's entry to record its payroll tax obligation for the period includes: (may include more than one answer)

A. a debit to Payroll Tax Expense.

B. a credit to Payroll Taxes Payable (or Accrued Payroll Taxes).

C. a credit to Wages Payable (or Accrued Wages for the net pay).

D. a debit to Wages Expense for the gross pay.

E. none of the above

6.)The ______ interest rate, adjusted for compounding frequency, is used to calculate the amount of interest paid for each payment period of a bond's life.

a.)Stated

b.)Market

c.)Both Stated and Market.

d.)None of the above.

7.)An unearned revenue or deferred credit:

a.)is a current liability for cash collected from customer prior to delivering the agreed goods or providing the agreed services.

b.)is reported on the income statement as a nonoperating gain rather than as a revenue.

c.)is a current liability for the expected value of goods to be provided or services to be performed for contracts under negotiation.

d.)is a current liability for the gross profit on purchase orders that have been received not but yet been fulfilled.

8.)Current maturities of long-term debt is a current liability representing that portion of long-term debt that:

A. an increase to current liabilities, and no effect on cash.

B. an increase to expenses, and a decrease to net income.

C. a decrease to current liabilities, and a decrease to cash (or repair parts inventory).

D. a decrease to expenses, and an increase to net income.