A = L + E
Current
Liabilities
Balance Sheet Impact
N is for Notes
100
A ______ is a probable future payment of assets or services that a company is currently obligated to make as a result of past transactions or events.
What is Liability
100
_____ are obligations not due within one year or the company's operating cycle, whichever is longer.
What is current liabilities
100
When looking at employee salaries Gross pay = take-home pay. (true/false)
What is false
100
Unearned revenue is another name for sales. (true/false)
false
100
Buyer Company asks to extend its past due $600 account payable to Seller Company. Seller Company agrees to accept $100 cash and a 60-day, 12%, $500 note payable to replace the account payable. How does Buyer Company record this event in the general journal?
What is Accounts Payable 600 Cash 100 Notes Payable 500
200
a company receives a bill for $100 due in 90 days for shipping charges on their most recent delivery of product. When must they record the $100 expense?
when they know they owe $100
200
A1A landscaping decides to purchase a new pickup truck. The terms of the purchase are $300/month for 60 months with $0 down. The first payment is due 11/1. What amount will the include as a current liability related to the purchase?
on 11/1 they will include 12x300 = 3,600
200
accounting titles using _______ usually refer to liability accounts.
What is payable
200
Company Y collects $60 in sales tax for the month of July. On August 15th they submit the $60 to the state of Florida. What is the journal entry on August 15th?
st Payable $60 Cash $60
200
when the end of the accounting period occurs between the signing of the note and the maturity of the note, the _____ principle requires that the accrued but unpaid interest be recorded for the current period.
What is matching principle
300
A corporation has a $42,000 credit balance in the Income Tax Payable account. Period-end information shows that the actual liability is $50,000. The company should record an entry to _____
debit income tax expense and credit income tax liability
300
A ______ is a potential obligation that depends on a future event arising from a future transaction or event.
What is contingent liability
300
If companies intentionally fail to include a contingent liability of $10,000 as part of their total current liabilities of $80,000, this will have what impact on the balance sheet of the company?
What is distort current ratio (asset v. liability)
300
The Orlando Magic received $6 million cash in advance season ticket sales. Prior to the beginning of the basketball season, what is the journal entry to record the $6 million?
debit cash / credit unearned revenue
300
On April 1, CB company borrows $100,000 cash by signing a 60 day notes payable at 4% interest. What is the journal entry to record this transaction on April 1?
cash $100,000 st note payable $100,000
400
On December 1, Martin Company signed a $5,000, 3-month, 6% note payable, with the principle plus interest due on March 1 of the following year. What journal entry, if any, needs to be recorded on December 31?
Feedback: $5,000 x 0.06 x 1/12 = $25 accrued interest debit interest exp $25 / credit accrued interest payable $25
400
On December 1, Ford finds out that 120,000 2014 Ford Explorers must be recalled due to a faulty ignition switch. The recalls will start on January 1. Ford is also in negotiations with part manufacturer, who Ford believes is at fault in this case. What impact will this have on the Ford financial statements for the December 31 year end?
none - not more likely than not to be outflow of resources. Disclosed when more likely than not to be outflow and liability when amount can be reasonably estimated.
400
On January 15th, Hull company's payroll register shows $10,000 sales salaries for the bi-weekly pay period. Withholdings from employees salaries include FICA SS taxes of 6.2%; FICA medicare taxes of 1.45% and federal withholdings of $610. What is the journal entry to record the payroll on January 15th?
Salaries expense $10,000 FICA - SS $625 FICA - Med $145 WH $610 Salaries payable 8,620
400
The full disclosure principle requires the reporting of contingent liabilities when?
when they are reasonably possible
400
On April 1, CB company borrows $100,000 cash by signing a 60 day notes payable at 4% interest. What is the journal entry to record this transaction on May 31?
ST Note pay $100,000 Interest expense 4,000 cash $104,000
500
When must a contingent liability be disclosed?
when it is more likely than not that there will be a probable outflow of resources and the amount can be estimated reliably.
500
Conner Company borrows $185,600 cash on November 1, 2013, by signing a 120-day, 8% note. What is the total amount of interest expense that Conner will recognize for this note?
What is $185,600 * .08 * 120/360 = $4,949
500
On November 1, 2013 the Mulberry Company borrows $150,000 cash by signing a 120 day, 5% note payable with a face value of $150,000. What journal entry, if any, must be recorded on December 31?
int exp $1,250 accrued interest payable $1,250
500
give two examples of current liabilities
What is sales tax payable/ accounts payable
500
On December 15th Charlie Co. borrows $50,000 cash by signing a 30 day notes payable at an interest rate of 2%. What journal entry, if any, should be recorded on December 31?
int exp $42 acc. int pay $42
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