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(Answered) Accounting Study Guide: current liabilities, current assets, debt, balance sheet, liquidity, accrued liability, and more...


Please help with answers to this study guide;51. The relationship between current liabilities and current assets is;a. useful in determining income.;b. useful in evaluating a company's liquidity.;c. called the matching principle.;d. useful in determining the amount of a company's long-term debt.;52. Most companies pay current liabilities;a. out of current assets.;b. by issuing interest-bearing notes payable.;c. by issuing stock.;d. by creating long-term liabilities.;53. A current liability is a debt that can reasonably expected to be paid;a. within one year.;b. between 6 months and 18 months.;c. out of currently recognized revenues.;d. out of cash currently on hand.;54. Liabilities are classified on the balance sheet as current or;a. deferred.;b. unearned.;c. long-term.;d. accrued.;55. From a liquidity standpoint, it is most desirable for a company to have current;a. assets equal current liabilities.;b. liabilities exceed current assets.;c. assets exceed current liabilities.;d. liabilities exceed long-term liabilities.;56. The relationship of current assets to current liabilities is used in evaluating a company's;a. operating cycle.;b. revenue-producing ability.;c. short-term debt paying ability.;d. long-range solvency.;57. Which of the following is usually not an accrued liability?;a. Interest payable;b. Wages payable;c. Taxes payable;d. Notes payable;58. With an interest-bearing note, the amount of assets received upon issuance of the note is generally;a. equal to the note's face value.;b. greater than the note's face value.;c. less than the note's face value.;d. equal to the note's maturity value.;Use the following information for questions 59 - 61.;Chase County Bank agrees to lend Agler Brick Company $300,000 on January 1. Agler Brick Company signs a $300,000, 8%, 9-month note.;59. The entry made by Agler Brick Company on January 1 to record the proceeds and issuance of the note is;a. Interest Expense 18,000;Cash. 282,000;Notes Payable 300,000;b. Cash 300,000;Notes Payable 300,000;c. Cash 300,000;Interest Expense 18,000;Notes Payable 318,000;d. Cash 300,000;Interest Expense 18,000;Notes Payable 300,000;Interest Payable 18,000;60. What is the adjusting entry required if Agler Brick Company prepares financial statements on June 30?;a. Interest Expense 12,000;Interest Payable 12,000;b. Interest Expense 12,000;Cash 12,000;c. Interest Payable 12,000;Cash 12,000;d. Interest Payable 12,000;Interest Expense 12,000;61. What entry will Agler Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?;a. Notes Payable 318,000;Cash 318,000;b. Notes Payable 300,000;Interest Payable 18,000;Cash 318,000;c. Interest Expense 18,000;Notes Payable 300,000;Cash 318,000;d. Interest Payable 12,000;Notes Payable 300,000;Interest Expense 6,000;Cash 318,000;62. As interest is recorded on an interest-bearing note, the Interest Expense account is;a. increased, the Notes Payable account is increased.;b. increased, the Notes Payable account is decreased.;c. increased, the Interest Payable account is increased.;d. decreased, the Interest Payable account is increased.;Use the following information for questions 63 - 64.;On October 1, Steve's Carpet Service borrows $50,000 from National Bank on a 3-month, $50,000, 8% note.;63. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?;a. Interest Payable 1,000;Interest Expense 1,000;b. Interest Expense 4,000;Interest Payable 4,000;c. Interest Expense 1,000;Interest Payable 1,000;d. Interest Expense 1,000;Notes Payable 1,000;64. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is;a. Notes Payable 51,000;Cash 51,000;b. Notes Payable 50,000;Interest Payable 1,000;Cash 51,000;c. Notes Payable 50,000;Interest Payable 4,000;Cash 54,000;d. Notes Payable 50,000;Interest Expense 1,000;Cash 51,000;65. Interest expense on an interest-bearing note is;a. always equal to zero.;b. accrued over the life of the note.;c. only recorded at the time the note is issued.;d. only recorded at maturity when the note is paid.;66. The entry to record the payment of an interest-bearing note at maturity after all interest expense has been recognized is;a. Notes Payable;Interest Payable;Cash;b. Notes Payable;Interest Expense;Cash;c. Notes Payable;Cash;d. Notes Payable;Cash;Interest Payable;67. Sales taxes collected by a retailer are recorded by;a. crediting Sales Taxes Revenue.;b. debiting Sales Taxes Expense.;c. crediting Sales Taxes Payable.;d. debiting Sales Taxes Payable.;68. Unearned Rental Revenue;a. is a contra account to Rental Revenue.;b. is a revenue account.;c. is reported as a current liability.;d. is debited when rent is received in advance.;69. The amount of sales tax collected by a retail store when making sales is;a. a miscellaneous revenue for the store.;b. a current liability.;c. not recorded because it is a tax paid by the customer.;d. recorded as an operating expense.;70. A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $168,000, what is the amount of the sales taxes owed to the taxing agency?;a. $160,000.;b. $168,000.;c. $8,400.;d. $8,000.
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Accounting Study Guide: current liabilities, current assets, debt, balance sheet, liquidity, accrued liability, and more...

 


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