FOR INSTRUCTOR USE ONLY 8 3 Test Bank for Survey of Accounting First Edition 28

For instructor use only 8 3 test bank for survey of

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Test Bank for Survey of Accounting, First Edition28.TF37.TF131.MC140.MC237.Be287.SA29.TF38.TF132.MC141.MC238.Be293.SA30.TF124.MC133.MC142.MC239.BeLearning Objective 339.TF49.TF161.MC171.MC241.Be278.C40.TF51-52.TF162.MC172.MC242.Be279.C41.TF149.MC163.MC173.MC254.Ex284.Ma42.TF150.MC164.MC174.MC255.Ex288.SA43.TF151.MC165.MC175.MC256.Ex289.SA44.TF152.MC166.MC176.MC257.Ex292.SA45.TF153.MC167.MC177.MC258.Ex46.TF154.MC168.MC178.MC259.Ex47.TF157.MC169.MC179.MC260.Ex48.TF160.MC170.MC240.Be277.CLearning Objective 4182.MC192.MC202.MC242.Be281.C183.MC193.MC203.MC243.Be284.Ma53.TF184.MC194.MC204.MC245.Be288.SA54.TF185.MC195.MC205.MC256.Ex290.SA55.TF186.MC196.MC206.MC259.Ex292.SA56.TF187.MC197.MC207.MC260.Ex57.TF188.MC198.MC208.MC261.Ex58.TF189.MC199.MC209.MC262.Ex180.MC190.MC200.MC214.MC181.MC191.MC201.MC217.MC280.CFOR INSTRUCTOR USE ONLY8-4
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Reporting and Analyzing Liabilities and Stockholders’ EquityLearning Objective 5ItemTypeItemTypeItemTypeItemTypeItemTypeItemType59.TF216.MC224.MC231.MC263.Ex291.SA60.TF218.MC225.MC244.Be264.Ex210.MC219.MC226.MC246.Be265.Ex211.MC220.MC227.MC247.Be266.Ex212.MC221.MC228.MC257.Ex282.C213.MC222.MC229.MC258.Ex283.C215.MC223.MC230.MC260.Ex284.MaNote:TF = True-FalseC = CompletionMC=Multiple ChoiceEx = ExerciseMa=MatchingSA=Short Answer EssayBe=Brief ExerciseCHAPTER LEARNING OBJECTIVES1.Explain how to account for current liabilities.A current liability is a debt that a companycan reasonably expect to pay (a) from existing current assets or through the creation of othercurrent liabilities, and (b) within one year or the operating cycle, whichever is longer. Themajor types of current liabilities are notes payable, accounts payable, sales taxes payable,unearned revenues, and accrued liabilities such as taxes, salaries and wages, and interestpayable.When a promissory note is interest–bearing, the amount of assets received upon theissuance of the note is generally equal to the face value of the note, and interest expense isaccrued over the life of the note. At maturity, the amount paid is equal to the face value of thenote plus accrued interest.Companies record sales taxes payable at the time the related sales occur. The companyserves as a collection agent for the taxing authority. Sales taxes are not an expense to thecompany. Companies hold employee withholding taxes, and record them in appropriateliability accounts, until they remit these taxes to the governmental taxing authorities.Unearned revenues are initially recorded in an unearned revenue account. As the companyrecognizes revenue, a transfer from unearned revenue to revenue occurs. Companies reportthe current maturities of long-term debt as a current liability in the balance sheet.2.Explain how to account for bonds.When companies issue bonds, they increase Cash forthe cash proceeds and increase Bonds Payable for the face value of the bonds. In addition,they use the accounts Premium on Bonds Payable and Discount on Bonds Payable to showthe bond premium and bond discount, respectively. Bond discount and bond premium areamortized over the life of the bond, which increases or decreases interest expense,respectively.
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