Current Liabilities

1. 1A liability is a current payment of assets or services a company owns.

   1. ATrue
   2. BFalse
2. 2Which is an example of a CURRENT liability?

   1. ABank Indebtedness
   2. BMortgage Payable
   3. CAccumulated Amortization
   4. DBonds
3. 3The goods and service tax (GST) rate varies from province to province.

   1. ATrue
   2. BFalse
4. 4Which is considered a Payroll Liability?

   1. ATrade payable
   2. BUnearned Revenue
   3. COffice supplies
   4. DUnion Dues
5. 5Which of the following could be a contra-liability account?

   1. AGST Payable
   2. BGST Receivable
   3. CPST Payable
   4. DCPP Payable
6. 6A $40,000, interest-bearing note payable is signed on December 26, 2006. If the note is a 120-day note, what is the maturity date for this short-term liability?

   1. AMarch 25
   2. BMarch 26
   3. CApril 25
   4. DApril 26
7. 7$20,000 cash is borrowed on a 60 day note payable. If the interest rate is 12%, how much interest will be charged at maturity?

   1. A$2,400
   2. B$395
   3. C$400
   4. D$200
8. 8Twenty-thousand dollars in cash is borrowed on a 60-day note payable. If the interest cost to borrow is $400, and we assume that each month has thirty days, what is the actual interest rate on this note as expressed on an annual basis?

   1. A10.00%
   2. B12.00%
   3. C16.00%
   4. D20.00%
9. 9
A warranty is an estimated liability.
   

   1. ATrue
   2. BFalse
10. 10A contingent liability exists when the liability is not probable or it cannot be estimated.

    1. ATrue
    2. BFalse

11. 11Examples of short-term liabilities include: wages payable, warranty liabilities, lease liabilities, payroll and other taxes payable.

    1. ATrue
    2. BFalse
12. 12The following statements are partial statements concerning current liabilities. Which one of these partial statements concerning current liabilities is incorrect?

    1. AAnother name for current liabilities is short-term liabilities.
    2. BThe only way that a current liability can be satisfied is to be paid by using current assets.
    3. COne way that a specific current liability can be satisfied is through the creation of new current or long-term liabilities.
    4. DNone of the above.
13. 13Although liabilities can be classified as either current liabilities or long-term liabilities which is a formal classification scheme, they can also be classified informally as (1) certain in amount and certain as to ultimate payment, (2) estimated in amount but uncertain as to ultimate payment, and (3) uncertain as to the amount and uncertain as to ultimate payment. Which of the following items falls into category 3?

    1. AThe accrual of five days of wage expenses that are incurred in the current accounting period but will not be paid until the next accounting period.
    2. BSales tax collected from customers which must be paid over to the province within 2 months.
    3. CThe company is sued for manufacturing faulty products. The case will go to court and the company stands to be fined a material amount but they also have a strong chance of winning the case.
    4. DDuring the past year customers have purchased gift certificates from the company. These certificates must be used within nine months from the purchase date or they expire.
14. 14
Zero-Rated Supplies such as groceries, prescription drugs, and medical devices are charged GST at 0%.
    

    1. ATrue
    2. BFalse
15. 15
All provinces charge PST EXCEPT:
    

    1. AAlberta.
    2. BQuebec.
    3. CPrince Edward Island
    4. DBritish Columbia
16. 16
Which of the following is NOT an example of Unearned Revenues?
    

    1. APrepaid Office Supplies
    2. BAdvance Ticket Sales
    3. CMagazine Subscription
    4. DMonies received in advance.
17. 17
The two reasons why a company might accept a note receivable from a customer (it's a note receivable in our hands and a note payable in the hands of our customer) instead of just an account receivable would be:
    

    1. A(1) notes receivable do not earn interest and (1) are a less formal type of receivable.
    2. B(1) notes receivable do earn interest income and (2) are a less formal type of receivable.
    3. C(1) notes receivable earn interest income and (2) are a more formal type of receivable.
    4. D(1) notes receivable do not earn interest and (2) are a more formal type of receivable.
18. 18
The maturity value of a note payable is calculated as:
    

    1. AThe principle of the note plus the accrued interest expense on the note.
    2. BThe face amount of the note plus the accrued interest expense on the note.
    3. CThe face amount only.
    4. DBoth "The principle of the note plus the accrued interest expense on the note." and "The face amount of the note plus the accrued interest expense on the note." are correct.
19. 19
Twenty-thousand dollars in cash is borrowed on a 60-day note payable. If the interest cost to borrow is $400, and we assume that each month has thirty days, what is the actual interest rate on this note as expressed on an annual basis?
    

    1. A10.00%
    2. B12.00%
    3. C16.00%
    4. D20.00%
20. 20
A warranty is a contingent liability.
    

    1. ATrue
    2. BFalse
21. 21
Contingent assets should never be recorded until they are actually realized.
    

    1. ATrue
    2. BFalse

Description

MIDTERM Accounting Quiz on Current Liabilities, created by Barbie Guzman on 26/02/2019.

Author

Barbie Guzman

Language

English

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