Fundamental Financial Accounting Concepts
Quiz 9: Accounting for Current Liabilities and Payroll
Monthly Remittance of Sales Tax
Monthly remittance of sales tax: A)Reduces liabilities. B)Is a claims exchange transaction. C)Reduces stockholders' equity. D)All of these answer choices are correct.
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Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet? A)The amount can be reasonably estimated. B)The outcome is probable. C)The outcome is reasonably possible. D)The outcome is probable and can be reasonably estimated.
Burger Barn has been named as a plaintiff in a $5 million lawsuit filed by a customer over the addictive nature of the company's french fries.Burger Barn's attorneys have advised them that the likelihood of a future obligation from the suit is remote.As a result of the lawsuit,Burger Barn should: A)Disclose the lawsuit in the notes to the financial statements. B)Recognize a $5 million liability on its balance sheet for the contingency. C)Ignore the lawsuit in its financial statements. D)Settle with the customer immediately for $5 million to avoid harmful publicity.
Which of the following answers indicates the effect of the February 12,2017 entry on the financial statements of Lucas Corporation?
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