Chapter 10-12 Exam

Chapter 10-12 Exam - 24% (8 out of 34 correct) Responses to...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
24% (8 out of 34 correct) Responses to questions are indicated by the symbol. 1. Which of the following is a criterion for the classification of a liability as current? I. It is a debt that can be paid from existing current assets. II. It is a debt that can be paid through the creation of other current liabilities. III. It must be paid within one year or the operating cycle, whichever is shorter. A. I and II B. II and III C. I and III D. I, II, and III A current liability is a debt the company reasonably expects to pay (1) from existing current assets or through the creation of other current liabilities, and (2) within the next year or the operating cycle, whichever is longer . 2. Which one of the following is not a current liability? A. Interest payable B. Mortgages payable C. Salaries payable D. Current maturities of long-term debt Correct! Mortgages are long-term liabilities as they are typically paid over 15 to 30 years. 3. Which of the following is not a typical current liability? A. Prepaid rent B. Federal unemployment taxes payable C. Unearned passenger ticket revenue D. Current maturities of long-term debt A current liability is a debt the company reasonably expects to pay (1) from existing current assets or through the creation of other current liabilities, and (2) within the next year or the operating cycle, whichever is longer. Unearned passenger ticket revenue is usually a current liability.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4. A corporation issued a $50,000, 9%, 4-month note on July 1. The corporation's year-end is September 30. Which one of the following is the adjusting entry for interest on September 30? A. Interest Expense 1,125 Notes Payable 1,125 B. Interest Expense 1,500 Interest Payable 1,500 C. Interest Expense 1,500 Notes Payable 1,500 D. d) Interest Expense 1,125 Interest Payable 1,125 Interest is calculated by multiplying the principal times the annual interest rate times the time period the note is outstanding. 5. On September 1, Banner Co. borrowed $70,000 from the City Bank for five months at 9%. Which journal entry will Banner Co. make on December 31 before issuing its financial statements? A. Interest Expense 6,300 Notes Payable 6,300 B. Interest Expense 1,575 Interest Payable 1,575 C. Interest Expense 2,625 Notes Payable 2,625 D. Interest Expense 2,100 Interest Payable 2,100 Interest is calculated by multiplying the principal times the annual interest rate times the time period the note is outstanding. 6. Unearned revenue is a type of current liability. A. True B. False
Background image of page 2
Unearned revenue indicates that a service or product needs to be provided in the future. 7. The cash register tape indicates cash sales are $2,000 and sales taxes are $155. What journal entry is needed to record this information?
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

Chapter 10-12 Exam - 24% (8 out of 34 correct) Responses to...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online