Review Questions from Lecture

Review Questions from Lecture - 1 Liabilities Chapters 8 9...

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Chapters 8, 9 & 11 Questions From Lectures Dr. Ron Lazer 1. Liabilities: 1. Are obligations 2. Require a probable future sacrifice of economic benefits. 3. Are a result of past transactions or events. 4. All of the above 2. Which of the following occurs when accrued interest is accrued on a note payable, at year- end? 1. Interest is accrued for the number of days the note is outstanding in the subsequent period. 2. Interest is accrued for the number of days the note is outstanding in the current period. 3. Interest is accrued for the total life of the note. 4. None of the above. 3. In the current year, a company sells 1,000 units of a product for $100 each. Each product is sold with a one- year warranty. It is estimated that warranty costs will be 10% of the sale price of the product. Historically, 60% of the warranty repairs are completed in the year of sale and 40% of the warranty repairs are completed in the year after the sale. What is the correct amount of warranty expense for the current year?
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