303 Final- CH. 12 Flashcards
(30 cards)
T/F: In accounting for short-term debt expected to be refinanced to long-term debt, GAAP uses the financial statement issuance date to determine whether the debt should be classified as ST or LT
False: GAAP uses the balance sheet to determine the classification
Which of the following is NOT an example of a current liability at December, 31, 2026
Bonds Payable, due 12/28
Current liabilities are defined as obligations whose liquidation is reasonably expected to
require the use of current assets or the creation of other current liabilities
T/F: State and Federal unemployment taxes are imposed on both employers and employees
False: imposed solely on the employer
The entry to record the collection of sales tax by a retailer may include credits to both Sales Revenue and Sales Tax Payable.
True
Which of the following is FALSE?
Compensated absences are usually reported as a long-term liability
Federal income taxes withheld by the employer on behalf of the employee are recorded as
current liabilities
Which of the following is NOT true about the discount on short-term notes payable?
The Discount on Notes Payable account should be reported as an asset on the balance sheet
Liabilities are
obligations arising from past transactions and payable in assets or services in the future.
Which of the following statements regarding current liabilities is false?
Discount on Notes Payable represents interest revenue to the issuer.
T/F: The discount on a short-term zero-interest bearing note represents interest.
True
A liability for compensated absences is
accrued only if specific conditions are met
Which of the following is included in employer payroll taxes?
FICA taxes, Federal unemployment taxes, State unemployment taxes
T/F: When revenue from gift card breakage is recorded, no cost of goods sold is recognized.
True
Company A rents office space to Company B. If Company B pays Company A for one year’s rent in advance on June 1:
Company A will record Unearned Rent Revenue and Company B will record Prepaid Rent.
Employer payroll taxes include all of the following except:
state income taxes
Typical contingencies include all of the following except
bonds payable
In determining the amount to be accrued for a contingency when there is a range of possible amounts of loss and no amount within the range is a better estimate than any other amount, the liability to be accrued should be measured
using the minimum amount of the loss in the range, reporting high level in notes
T/F: Gain contingencies are not recorded
True
A large anticipated insurance recovery is reported as
a disclosure only (contingent gain)
Which of the following sets of conditions would give rise to the accrual of a contingency under current GAAP?
Amount of loss is reasonably estimable and occurrence of the event is probable
Gain contingencies include all of the following except
All of these are gain contingencies:
possible receipts of donations and gifts
pending court cases where the probable outcome is favorable
possible refunds from the government in tax disputes
A loss related to general or unspecified business risks is
not accrued
Which of the following factors need not be considered in determining whether a liability should be recorded with respect to pending or threatened litigation?
All of these must be considered:
The time period in which the cause of action occurred
The probability of an unfavorable outcome
The ability to make a reasonable estimate of the loss
