Question: 11 a brewing company operating in an ontario city experiencing...
11. A brewing company operating in an Ontario city experiencing
water shortages received its water bill for December 2018, on
December 31, 2018. The bill ($8,000) represents the cost of water
used in December to make its product. The company will not publish
the 2018 financial statements until February 2019. Therefore, the
adjusting entry as of December 31, 2018 includes which of the
A. cr. utilities payable $8,000
B. cr. cash $8,000
C. cr. utilities expense $8,000
D. no adjusting entry needed because the bill will not be paid until January 2014
12. A short-term note payable may include all of the following
A. Trade notes payable.
B. Non trade notes payable.
C. A current portion of a long-term liability.
D. Unearned revenue.
13. A firm sold $100,000 worth of goods during 2018. The firm
extends warranty coverage on these goods. Historically, warranty
costs have averaged 2% of total sales. During 2018, the firm
incurred $1,000 to service goods sold in 2017 and $200 to service
goods sold in 2018. What is warranty expense for 2018?
14. On November 7, 2014 local residents sued Brimley Corporation
for excess chemical emissions that caused some of them to seek
medical attention. The total lawsuit is $8,000,000. Brimley
Corporation's lawyers believe that the lawsuit will be successful
and that the amount to be paid to the residents will be $4,000,000.
On its December 31, 2014 financial statements Brimley should:
A. Accrue a provision loss of $8,000,000 with no financial statement disclosure necessary.
B. Accrue a provision loss of $4,000,000 and note disclose.
C. Do nothing as the lawsuit has not yet ended.
D. Simply disclose the details regarding the lawsuit in a note.
15. Constructive obligations may arise from:
A. Accrued Liabilities resulting from operations.
B. Warranty obligations.
C. Notes Payable.
D. Unearned Revenues.
16. A company had sales of $1 million. Coupons in the amount of
$1 per $10 in sales were given to paying customers. History has
shown that 50% of all coupons are redeemed. Which of the following
statements is correct?
A. A provision for $50,000 must be recognized.
B. A provision for $100,000 must be recognized.
C. A provision for $1 million must be recognized.
D. No provision is necessary.
17. By law, a fleet of aircraft must be subject to a major
overhaul every 5 years as part of its scheduled maintenance
program. Which of the following statements is correct?
A. An accrual should be made in each of the 5 years preceding the overhaul.
B. The costs of the overhaul should be expensed as incurred.
C. The cost of the overhaul should be deferred and amortized.
D. The estimated cost of the overhaul should be disclosed as part of a continuity schedule in the notes to the financial statements.
18. Contingent liabilities will or will not become actual liabilities depending on:
A. Whether they are probable and estimable
B. The degree of uncertainty
C. The present condition suggesting a liability
D. The outcome of a future event
19. On September 1, 2017, Company B signed a $7,392, two-year non-interest-bearing note payable in full on August 31, 2019. Company B received $6,000 cash. What was the yield or effective rate of interest rounded to the nearest whole percent?
A. 11 percent
B. 14 percent
C. 18 percent
D. 23 percent
20. VCR Company owed a $73,311 debt due on January 1, 2012. An
agreement was reached to pay it off in three equal annual payments
of $30,000 each, starting on December 31, 2012. The interest rate
was 11 percent. The balance in the liability account of VCR Company
on January 1, 2014 is (round annual payment to nearest $1):