Question 1

Each of the following is correct regarding bonds except they are
A) a form of interest-bearing notes payable.
B) attractive to many investors.
C) issued by corporations and governmental agencies.
D) sold in large denominations.

Accepted Answer

Bonds are not necessarily sold in large denominations. Some bonds can be purchased in small denominations, such as $100 or $1,000, making them accessible to individual investors.

Question 2

A cash register tape shows cash sales of €3,500 and sales taxes of €210. The journal entry to record this information is

Accepted Answer

The answer of A cash register tape shows cash sales...

Question 3

The current portion of long-term debt should
A) be paid immediately.
B) be reclassified as a current liability.
C) be classified as a non-current liability.
D) not be separated from the long-term portion of debt.

Accepted Answer

The current portion of long-term debt represents the portion of the debt that is due within the next year. As such, it should be reclassified as a current liability on the balance sheet to reflect its short-term nature.

Question 4

Pickett Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 60,000 subscriptions in January at $18 each. What entry is made in January to record the sale of the subscriptions?

Accepted Answer

The answer of Pickett Company typically sells subscriptions on an...

Question 5

A company receives $435, of which $35 is for sales tax. The journal entry to record the sale would include a a debit to Sales Tax Expense for $35.
B) debit to Sales Taxes Payable for $35.
C) debit to Sales Revenue for $435.
D) debit to Cash for $435.

Accepted Answer

The answer of A company receives $435, of which $35...

Question 6

The current ratio is
A) current assets plus current liabilities.
B) current assets minus current liabilities.
C) current assets divided by current liabilities.
D) current assets multiplied by current liabilities.

Accepted Answer

The current ratio is defined as current assets divided by current liabilities. It is a measure of a company's ability to pay off its short-term liabilities using its short-term assets.

Question 7

Ed's Bookstore has collected $750 in sales taxes during April. If sales taxes must be remitted to the government monthly, what entry will Ed's Bookstore make to show the April remittance?

Accepted Answer

The answer of Ed's Bookstore has collected $750 in sales...

Question 8

Valerie's Salon has total receipts for the month of $24,645 including sales taxes. If the sales tax rate is 6%, what are Valerie's sales for the month?
A) $23,166.30
B) $26,123.70
C) $23,250.00
D) It cannot be determined.

Accepted Answer

The answer of Valerie's Salon has total receipts for the...

Question 9

Hilton Company issued a four-year interest-bearing note payable for $500,000 on January 1, 2013. Each January the company is required to pay $125,000 on the note. How will this note be reported on the December 31, 2014 statement of financial position?
A) Long-term debt, $500,000.
B) Long-term debt, $375,000.
C) Long-term debt, $250,000; Long-term debt due within one year, $125,000.
D) Long-term debt, $375,000; Long-term debt due within one year, $125,000.

Accepted Answer

The answer of Hilton Company issued a four-year interest-bearing note...

Question 10

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $71,500. If the sales tax rate is 4%, what amount must be remitted to the taxing authority for February's sales taxes?
A) $2,860
B) $2,750
C) $4,290
D) It cannot be determined.

Accepted Answer

The answer of Oakley Company does not ring up sales...

Question 11

Julie's Boutique has total receipts for the month of $39,060 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month?
A) $37,108
B) $37,200
C) $39,060
D) It cannot be determined.

Accepted Answer

To find the sales for the month, we need to subtract the sales tax from the total receipts.

Let S be the sales for the month.

Then, we have:

S + 0.05S = 39060

Solving for S, we get:

S = 39060 / 1.05 = 37200

Therefore, the sales for the month are $37,200.

Question 12

Sales taxes collected by a retailer are reported as
A) contingent liabilities.
B) revenues.
C) expenses.
D) current liabilities.

Accepted Answer

Sales taxes collected by a retailer are reported as current liabilities because they are owed to the government and are expected to be paid within the next operating cycle or year.

Question 13

Hardy Company has current assets of $120,000, current liabilities of $100,000, non-current assets of $180,000 and non-current liabilities of $90,000. Hardy Company's working capital and its current ratio are
A) $110,000 and 1.20:1.
B) $20,000 and 1.58:1.
C) ($20,000) and 1.20:1.
D) $20,000 and 1.20:1.

Accepted Answer

Working capital = Current assets - Current liabilities 
= $120,000 - $100,000 = $20,000 
Current ratio = Current assets / Current liabilities 
= $120,000 / $100,000 = 1.20:1

Question 14

On January 1, 2014, Donahue Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2014, is
A) Current Liabilities, $600,000.
B) Non-current Liabilities $600,000.
C) Current Liabilities, $150,000; Non-current Liabilities, $450,000.
D) Current Liabilities, $450,000; Non-current Liabilities, $150,000.

Accepted Answer

The $150,000 due in the upcoming year is classified as a current liability. The remaining $450,000 is not due within the next year and is therefore classified as non-current. Therefore, the proper statement of financial position presentation on December 31, 2014, would show current liabilities of $150,000 and non-current liabilities of $450,000.

Question 15

On January 1, 2014, Howard Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2014, is
A) Current Liabilities, $1,000,000.
B) Non-current Liabilities $1,000,000.
C) Current Liabilities, $500,000; Non-current Liabilities, $500,000.
D) Current Liabilities, $250,000; Non-current Liabilities, $750,000.

Accepted Answer

The portion of the notes payable due within one year from the statement of financial position date is considered a current liability. The remaining portion is a non-current liability. Therefore, $250,000 is classified as current liabilities ($250,000 due within one year) and the remaining $750,000 is classified as non-current liabilities ($750,000 due beyond one year).

Question 16

Layton Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $52,500. If the sales tax rate is 5%, what amount must be remitted to the taxing authority for October's sales taxes?
A) $2,500
B) $2,625
C) $125
D) It cannot be determined.

Accepted Answer

The answer of Layton Company does not ring up sales...

Question 17

Any balance in an unearned revenue account is reported as a(n)
A) current liability.
B) long-term debt.
C) revenue.
D) unearned liability.

Accepted Answer

Unearned revenue represents payments received from customers for goods or services that have not yet been provided. Therefore, it is a current liability because the company is obligated to provide those goods or services in the future.

Question 18

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to ¥420,000,000 what is the amount of the sales taxes owed to the taxing agency?
A) ¥400,000,000
B) ¥420,000,000
C) ¥21,000,000
D) ¥20,000,000

Accepted Answer

The answer of A retail store credited the Sales Revenue...

Question 19

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to ¥336,000,000, what is the amount of the sales taxes owed to the taxing agency?
A) ¥320,000,000
B) ¥336,000,000
C) ¥16,800,000
D) ¥16,000,000

Accepted Answer

The answer of A retail store credited the Sales Revenue...

Question 20

The amount of sales tax collected by a retail store when making sales is
A) a miscellaneous revenue for the store.
B) a current liability.
C) not recorded because it is a tax paid by the customer.
D) recorded as an operating expense.

Accepted Answer

Sales tax collected by a retail store is not revenue for the store, but rather a liability that must be remitted to the government. As such, it is recorded as a current liability on the store's balance sheet until it is remitted to the government.

Quiz 10: Liabilities

Each of the following is correct regarding bonds except they are

A cash register tape shows cash sales of €3,500 and sales taxes of €210. The journal entry to record this information is

The current portion of long-term debt should

Pickett Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 60,000 subscriptions in January at $18 each. What entry is made in January to record the sale of the subscriptions?

A company receives $435, of which $35 is for sales tax. The journal entry to record the sale would include a a debit to Sales Tax Expense for $35. B) debit to Sales Taxes Payable for $35. C) debit to Sales Revenue for $435. D) debit to Cash for $435.

The current ratio is

Ed's Bookstore has collected $750 in sales taxes during April. If sales taxes must be remitted to the government monthly, what entry will Ed's Bookstore make to show the April remittance?

Valerie's Salon has total receipts for the month of $24,645 including sales taxes. If the sales tax rate is 6%, what are Valerie's sales for the month?

Hilton Company issued a four-year interest-bearing note payable for $500,000 on January 1, 2013. Each January the company is required to pay $125,000 on the note. How will this note be reported on the December 31, 2014 statement of financial position?

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $71,500. If the sales tax rate is 4%, what amount must be remitted to the taxing authority for February's sales taxes?

Julie's Boutique has total receipts for the month of $39,060 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month?

Sales taxes collected by a retailer are reported as

Hardy Company has current assets of $120,000, current liabilities of $100,000, non-current assets of $180,000 and non-current liabilities of $90,000. Hardy Company's working capital and its current ratio are

On January 1, 2014, Donahue Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2014, is

On January 1, 2014, Howard Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2014, is

Layton Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $52,500. If the sales tax rate is 5%, what amount must be remitted to the taxing authority for October's sales taxes?

Any balance in an unearned revenue account is reported as a(n)

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to ¥420,000,000 what is the amount of the sales taxes owed to the taxing agency?

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to ¥336,000,000, what is the amount of the sales taxes owed to the taxing agency?

The amount of sales tax collected by a retail store when making sales is