Sales Tax
Shareholder's Loan
Estimated and Contingent Liabilities
Notes/Accounts Payable
Wildcard
100
What account do taxes received from customers go into?
Tax Payable Account
100
In what situation would a Company want borrow a Shareholder Loan?
If company have cash flow problem (for example to meet payroll expense) they can borrow a Shareholders’ Loan.
100
A warranty is an example of what kind of liability?
It is an estimated liability.
100
When accruing interest owing on a notes payable what accounts are affected?
Interest Expense DR Interest Payable CR
100
Define the GAAP principle “revenue recognition”
Income is recognized as revenue whenever the company delivers or performs its product or service and receives payment for it.
200
What account records the GST a company spends and what kind of account is it?
GST recoverable, Contra Liability
200
Who are Shareholders and how do they help the Company?
Shareholders are owners of equity in the Company. They buy a part of company (shares) in exchange for part ownership. This can raise the finances of the company by injecting more cash.
200
What 2 accounts would be affected at the end of the period when adjusting the warranty expense to reflect the actual expense incurred over the period?
Warranty expense and Estimated Warranty Liability
200
What are the advantages of converting an accounts payable into a notes payable?
Formalizes the payment and binds it legally.
200
What is the journal entry to record the estimated warranty liability for a company?
Warranty expense DR Estimated warranty liability CR
300
How is the amount of tax remitted to the government calculated?
Sales Tax Payable minus Sales Tax Recoverable
300
Which accounts are affected when Company borrows money from Shareholders’?
Cash and Shareholders’ Loan accounts.
300
Record a journal entry for Samsung immediately after they have been ordered to pay $1.05B in damages to Apple.
They would not record a journal entry but instead put a note on their financial statements.
300
What accounts are affected when converting an account payable into a notes payable?
Accounts Payable DR Notes Payable CR
300
What is the difference between current ratio and quick ratio?
Current ratio: compares current assets to current liabilities. Quick ratio: compares current liquid assets (cash, short term investments and accounts receivable) to current liabilities
400
What accounts would be affected and by how much when a company sells goods worth $100 at 5% GST on account?
Accounts Receivable $105 DR Sales Revenue 100 CR Sales Tax Payable $5 CR
400
ABC Company paid back the Loan amount of $ 70,000 at the end of fiscal year 31st July 2013. Prepare journal entry for the transaction.
Shareholders’ Loan ………..70,000DR Cash……………………………70,000CR
400
Company A had a warranty expense that was equal to 5% of their total sales last year. Record the journal entry to estimate warranty expense at the beginning of the period if they expect $924,000 in sales this year.
(Warranty Expense 46,200 DR Estimated Warranty Liability 46,200 CR)
400
Calculate the amount of interest owing if a company has a notes payable of $63,000, 4% interest per annum, 11 months have passed.
2310.00
400
What is an accrued charge?
A known liability that is recognized for a current period, but is not paid until the period expires
500
What accounts are affected when a company purchases $100 of inventory in a province with 5% GST.
Inventory 100 DR GST Recoverable 5 DR Accounts Payable 105 CR
500
Name the three ways an owner can withdraw cash from a business?
Salary Dividend Shareholders’ loan
500
Company B estimated $1,200 in warranty expenses at the beginning of the period. Today, they spent $25 on parts and $50 on labour in relation to a warranty. Journalize this transaction.
Estimated Warranty Liability 75 DR Inventory 25 CR Cash 50 CR
500
Sarah F.inc has an “Account Payable” account worth $441,600.00 which represents the purchase of a Lamborghini. After the purchase, They decide to make a notes payable. Lamborghini charges 6% of interest per annum. 3 months later was the end of Sarah F. inc's fiscal year and interest must be recorded. Record the 2 transactions.
Accounts Payable 441,600 DR Notes Payable 441,600 CR Interest Expense 6624.00 DR Interest Payable 6624 CR
500
On the Statement of Financial Position, what two conditions need to be present to classify a liability as a current liability?
If it is held for the purpose of trading and is expected to be paid within 12 months after the reporting period
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