11 Interactive Quiz B

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Interactive Quiz B http://highered.mcgraw-hill.com/sites/0072996536/student_view0/chapter11/interactive_quiz_b.html[6/22/2010 6:51:15 PM] Interactive Quiz B (See related pages) Results Reporter Out of 30 questions, you answered 12 correctly with a final grade of 40% 12 correct (40%) 18 incorrect (60%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . 1 INCORRECT To be classified as a liability, a transaction must include three crucial factors: (1) a past transaction or event has occurred, which (2) results in a present obligation, requiring (3) a future payment of assets or services. A) True B) False Feedback: To be classified as a liability, a transaction must include three crucial factors: (1) a past transaction or event has occurred, which (2) results in a present obligation, requiring (3) a future payment of assets or services. 2 CORRECT Current liabilities, also called short-term liabilities, are obligations due within one year or the length of the company's operating cycle, whichever is shorter. A) True B) False Feedback: This is a correct statement except that current liabilities are obligations due within one year or the length of the company's operating cycle, whichever is longer, not shorter. 3 INCORRECT On January 1, 2005, a business signs a ten-year mortgage payable with its bank calling for monthly payments of $500 for a total of ten years. The company uses a calendar-year accounting period. The balance sheet on December 31, 2007 will show twelve mortgage payments as a current liability and seventy- two payments as a long-term liability. A) True B) False Feedback: By December 31, 2007, the company will have made 36 monthly payments and will have 84 payments remaining. Of these payments, 12 will be classified as a current liability and 72 will be classified as a long-term liability. 4 INCORRECT Another way to classify liabilities is: (1) certainty as to amount and certainty as to whom to pay, (2) certainty as to amount but uncertainty as to whom to pay, and (3) uncertainty as to amount and uncertainty as to whom to pay. A contingent liability is an example of the third type of liability. A) True B) False Feedback: A contingent liability, such as a pending lawsuit, may or may not become an actual liability. Due to this uncertainty, a contingent liability is an example of this third type of liability. 5 INCORRECT Unless a company is delinquent in paying its liabilities, sales taxes payable would always be classified as a current liability. A) True B) False Feedback: It is true that unless a company is delinquent in paying its liabilities, sales taxes payable would always be classified as a current liability. 6
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This note was uploaded on 08/01/2010 for the course ACC 101 taught by Professor Layvand during the Spring '09 term at Thomas Edison State.

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11 Interactive Quiz B - Interactive Quiz B Home >...

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