Chapter 8 Quiz

A  $0

B  $8,000

C  $24,000

D  $12,000

A  Sometimes the current ratio will be larger and sometimes the acid-test ratio will be larger.

B  The denominator in the ratios will differ.

C  The acid-test ratio will always be at least as large as the current ratio.

D  The current ratio will always be at least as large as the acid-test ratio.

A  Current liabilities divided by current assets.

B  Current assets divided by current liabilities.

C  Cash, short-term investments, accounts receivable, and inventory divided by current liabilities.

D  Cash, short-term investments, and accounts receivable divided by current liabilities.

A  Purchasing inventory on account.

B  Issuing common stock for cash.

C  Collecting an accounts receivable.

D  Purchasing equipment, signing a long-term note.

A  FICA withholding from the employee.

B  Federal income tax.

C  Employer’s FICA contribution.

D  State income tax.

A  $1.5 million.

B  $2.0 million.

C  $0

D  $1.8 million.

A  $600,000.00

B  $450,000

C  $150,000.00

D  $300,000.00

A  $30,000

B  $5,000

C  $10,000

D  $25,000

A  $4.5 million.

B  $0.00

C  $1.5 million.

D  $3.0 million.

A  Federal unemployment taxes.

B  State unemployment taxes.

C  FICA taxes.

D  Personal income taxes.

A  Resulting from past transactions or events.

B    

C  Arising from present obligations to other entities.

D  Arising from present obligations to other entities, Resulting from past transactions or events and A probable future sacrifice of economic benefits.

E  A probable future sacrifice of economic benefits.

A  Liabilities are all reported as current in the balance sheet.

B  Liabilities represent probable future sacrifices of benefits.

C    

D  Liabilities result from future transactions.

E  Liabilities are always payable in cash.

A  Inventory.

B  Accounts payable.

C  Accounts receivable.

D  Current investment in marketable securities.

A  $10,000

B  $30,000

C  $5,000

D  $25,000

A  Debit interest expense and credit interest payable, $4,000.

B  Debit interest expense and credit cash, $4,000.

C  Debit interest expense and credit interest payable, $12,000.

D  Debit interest expense and credit cash, $12,000.

A  Not disclosed.

B  Recorded.

C  Disclosed.

D  Paid.

A  The interest is paid and incurred.

B  The interest is incurred.

C  The interest is paid or incurred.

D  The interest is paid.

A  Increase the current ratio and increase the acid-test ratio.

B  No change to the current ratio and decrease the acid-test ratio.

C  Increase the current ratio and decrease the acid-test ratio.

D  Decrease the current ratio and decrease the acid-test ratio.

A  As a liability for $500,000 with disclosure of the range.

B  As a liability for $600,000 with disclosure of the range.

C  As a disclosure only. No liability is reported.

D  As a liability for $700,000 with disclosure of the range.

A  Disclosed but not reported as a liability.

B  Neither disclosed or reported as a liability.

C  Reported as a liability but not disclosed.

D  Disclosed and reported as a liability.

A  Notes payable due in six months.

B  Current portion of long-term debt.

C  An unused line of credit.

D  Deferred revenue to be earned in nine months.

A  A debit to an asset and a credit to a revenue account.

B  A debit to a liability and a credit to a revenue account.

C  A debit to a revenue and a credit to a liability account.

D  A debit to a revenue and a credit to an asset account.

A  one; one

B  two; two

C  one; ten

D  one; two

A  No change to the current ratio and decrease the acid-test ratio.

B  Decrease the current ratio and decrease the acid-test ratio.

C  Increase the current ratio and decrease the acid-test ratio.

D  Increase the current ratio and increase the acid-test ratio.

A  Debit Notes Receivable, $5,000; Credit Cash, $5,000.

B  Debit Cash, $5,000; Credit Notes Receivable, $5,000.

C  Debit Notes Payable, $5,000; Credit Cash, $5,000.

D  Debit Cash, $5,000; Credit Notes Payable, $5,000.

A  Notes payable due in two years.

B  Current portion of long-term debt.

C  Unused line of credit.

D  Notes payable due in 15 months.

A  Debit Notes Payable, $5,000; Credit Cash, $5,000.

B  Debit Notes Receivable, $5,000; Credit Cash, $5,000.

C  Debit Cash, $5,000; Credit Notes Receivable, $5,000.

D  Debit Cash, $5,000; Credit Notes Payable, $5,000.

A  It arises from present obligations to other entities.

B  It results from past transactions or events.

C  It represents a probable, future sacrifice of economic benefits.

D  It must be payable in cash.

A  Expense.

B  Revenue.

C  Liability.

D  Asset.

A  A debit to a liability and a credit to a revenue account.

B  A debit to a revenue and a credit to an asset account.

C  A debit to an asset and a credit to a revenue account.

D  A debit to an asset and a credit to a liability account.