Chapter 9 accounting second study set – Flashcards

Which of the following is not a characteristic of a liability? A) It represents a probable, future sacrifice of economic benefits B) it must be payable in cash C) it arises from present obligations to other entities D) It results from past transactions or events

Which of the following is the best definition of a current liability? A) an obligation payable within one year B) An obligation payable within one year of the balance sheet date C) an obligation payable within one year or within the normal operating cycle, whichever is longer D) an obligation expected to be satisfied with current assets or by the creation of other current liabilities

Current liabilities are normally recorded at their:

Which of the following is not a current liability? A) Accounts payable B) A note payable due in 2 years C) Accrued interest payable D) Sales tax payable

When cash is received from customers in the form of a refundable deposit, the cash account is increased and there is a corresponding increase in

A loss contingency should be accused on a companys financial statements only if the likelihood that a liability has been incurred is

A contingent loss should be reported in a footnote to the financial statements rather than being accrued if:

Paul company issues a product recall due to a defect discovered after the end of its fiscal year. Financial statements have not been issued yet. The action required on the books of Paul company for this contingency for the year just ended is

Volt Electronics sells equipment that includes a three year warranty. Volt repairs under the warranty are performed by an independent service company under a contract with volt. based on prior experience, warranty costs are estimated to be 25$ PER Item sold. Volt should recognize these warranty costs:

Which of the following is a contingency that should be accrued?