Question

1) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known amount and liabilities whose amount must be estimated D) liabilities of a known amount and contingent liabilities 2) Bonds with a face value of $100,000 were sold at an effective rate of 10% to yield cash proceeds in excess of $100,000. It is apparent the bonds had a: A) market rate greater than 10% B) market rate less than 10% C) stated rate less than 10% D) stated rate greater than 10% AOSA 2) Short-term notes payable: A) are generally due within three months, with a maximum time period of six months B) are shown as a reduction to notes receivable on the balance sheet, with an appropriate footnote disclosure C) are shown on the balance sheet with current liabilities D) are shown on the balance sheet after bonds payable 4) Potential liabilities that depend on future events arising out of past events are called: A) long-term liabilities B) estimated liabilities C) actual liabilities D) contingent liabilities 5) The carrying amount of bonds is equal to: A) the face value of the bonds less the premium on bonds payable B) the face value of the bonds plus the premium on bonds payable C) the face value of the bonds less the discount on bonds payable Di the face value of the bonds plus the premium on bonds payable or the face value of the bonds less the discount on bonds payable 6) A repair to an appliance under warranty occurs within the warranty period. What adjustment is made? A) Warranty Expense is debited B) Repair Expense is debited. C) Estimated Warranty Payable is debited. D) Estimated Warranty Payable is credited 7) A $10,000 bond quoted at 103 1/2 is selling for: A) $9,662 B) $9,897 C) $10,104 D) $10,350 se price over its face value is known as the The excess of a bond's issue price over its face value A) discount B) premium

Answer 1

1)	D	Liabilities of a known amount and contingent liabilities
2)	D	Stated rate greater than 10%	A bond's coupon rate is more than its YTM, then the bond is selling at a premium
3)	C	Are shown on the balance sheet with Current liabilities
4)	D	Contingent liabilities	Potential liabilities that depend on future events arising out of past events are called contingent liabilities
5)	D	The face value bond (+)(-) premium or discount
6)	C	Estimated warranty payable is debited
7)	D	10350	(10000*103.5/100)
8)	B	Premium