Quiz 7

1. 1All liabilities are probable future economic sacrifices arising from present obligations.

   1. ATrue
   2. BFalse
2. 2Accounts payable are formal, written promises to pay a certain sum of money on a specified date and typically specify a stated rate of interest.

   1. ATrue
   2. BFalse
3. 3The income tax payable that a company reports on its balance sheet represents the amount that is owed to the governmental units.

   1. ATrue
   2. BFalse
4. 4Which of the following is not an operating liability?

   1. Abonds payable
   2. Bunearned revenue
   3. Ccustomer deposits
   4. Dcompensated absences
5. 5Which of the following is also referred to as deferred credits?

   1. Alate fees
   2. Bgift cards
   3. Cunearned revenues
   4. Daccrued revenues
6. 6What are compensated absences?

   1. Apaid time off
   2. Bunpaid time off
   3. Cpayroll deductions
   4. Dhealthcare benefits
7. 7Asset retirement obligations are ________.

   1. Apresent value of future resource usage
   2. Bobligations to replace old buildings and equipment with new assets
   3. Csinking funds for bonds or other long-term liabilities
   4. Dlong-term legal requirements to restore property
8. 8Dismantling an ocean oil-rig platform is an example of an asset retirement obligation.

   1. ATrue
   2. BFalse
9. 9By recording a contingent gain, a company recognizes revenue when it is realized.

   1. ATrue
   2. BFalse
10. 10Contingent gains are generally not recognized in the financial statements due to conservatism.

    1. ATrue
    2. BFalse

11. 11A contingency is deemed to be probable if it is considered to be likely to occur.

    1. ATrue
    2. BFalse
12. 12Which of the following is the proper way to report a probable contingent asset?

    1. Aas a disclosure only
    2. Bas a deferred revenue
    3. Cas an accrued revenue
    4. Das an increase to receivables
13. 13A provision for a contingent loss is considered to be probable if the probability of its occurrence is ________.

    1. Aslight
    2. Bmore likely than not
    3. Cvirtually certain
    4. Dreasonably possible
14. 14A service-type warranty exists if the customer has the option to purchase the warranty separately.

    1. ATrue
    2. BFalse
15. 15When a company sells the service-type warranty contract, it records a liability for unearned revenue.

    1. ATrue
    2. BFalse
16. 16The defensive interval ratio gauges liquidity based on current resources available to meet current cash expenditures.

    1. ATrue
    2. BFalse
17. 17Which of the following would not be considered when evaluating whether to record a contingent loss for pending litigation?

    1. Athe type of litigation involved.
    2. Bthe ability to make a reasonable estimate of the amount of the loss
    3. Ctime period in which the underlying cause of action occurred
    4. Dthe probability of an unfavorable outcome
18. 18Which of the following best describes the accounting for assurance-type warranty costs?

    1. Aexpensed when paid
    2. Bexpensed when obligations are probable and estimable
    3. Cexpensed based on estimate in year of sale
    4. Dexpensed when warranty claims are certain
19. 19The quick ratio is calculated as the sum of cash and short-term marketable securities divided by current liabilities.

    1. ATrue
    2. BFalse
20. 20Contingencies should not be accrued, but should be disclosed if they are either (1) probable, but not estimable, or (2) reasonably possible.

    1. ATrue
    2. BFalse

Description

1 Accounting Quiz on Quiz 7, created by Ling Zheng Weng on 27/02/2019.

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Ling Zheng Weng

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English

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