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2003 Fall Accounting_011_final_exam_Fall_2003_Answers

2003 Fall Accounting_011_final_exam_Fall_2003_Answers -...

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Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Final Exam-Answer Key December 17, 2003 Instructions: You have 60 minutes. Answer the questions on the pages provided and please remember to show all work so that you may receive partial credit. Also please put your name on each page in case the pages get separated. Good luck!
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Multiple Choice 12 questions, 5 points each 1. A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should a. be accrued during the period when the compensated time is expected to be used by employees. b. be accrued during the period following vesting. c. be accrued during the period when earned. d. not be accrued unless a written contractual obligation exists. 2. Which of the following is a condition for accruing a liability for the cost of compensation for future absences? a. The obligation relates to the rights that vest or accumulate. b. Payment of the compensation is probable. c. The obligation is attributable to employee services already performed. d. All of these are conditions for the accrual. 3. Lopez Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2004. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Lopez recall all cans of this paint sold in the last six months. The management of Lopez estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?
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