CURRENT LIABILITIES AND CONTINGENCIES

Test Bank Ch no-13 Chapter 13 Copyright © 2010 John Wiley & Sons Canada, Ltd.Unauthorized copying, distribution, or transmission of this page is strictly prohibited

CHAPTER 13

CURRENT LIABILITIES AND CONTINGENCIES

MULTIPLE CHOICE—Conceptual Answer No.Description c 1.Definition of a liability.b 2.Characteristics of current liabilities.b 3.Definition of economic obligation.a 4.Classification of notes payable.b 5.Recognition and accounting for financial liabilities.d 6.Zero-interest-bearing notes.c 7.Refinancing of long-term debts.d 8.Identify item that is not a current liability.c 9.Identify the current liability.d 10. Classification of stock dividends distributable.a 11. Goods and Services Tax.b 12. Identify current liability.c 13. Accounting for GST.c 14. Provincial Sales Tax.d 15. Current liabilities in general -determine false statement.b 16. Corporation income tax.c 17. Determine employer’s payroll costs.d 18. Accumulating rights to benefits.c 19. Accrual of a liability for compensated absences.b 20. Non-accumulating rights to benefits.d 21. Methods of calculating employee bonuses.c 22. Definition of a provision.a 23. Recognition of an asset retirement obligation.c 24. Recognition of an asset retirement obligation.a 25. Recording accretion expense for ARO.c 26. Revenue approach for product guarantees.d 27. Determine false statement regarding warranties.b 28. Accounting for premiums and coupons.c 29. Recognition of contingencies(private enterprise standards).a 30. Recognition of contingencies (IFRS).d 31. Accrual of contingent liability.c 32. Proposed amendments regarding provisions and contingencies.c 33. Disclosure of commitments.d 34. Acid-test ratio elements.c 35. Days payable outstanding elements.d 36. IFRS re customer loyalty programs.hzzled Intermediate Accounting Volume 2 Canadian 9th Edition Kieso Test Bank Visit TestBankDeal.com to get complete for all chapters

Test Bank for Intermediate Accounting, Ninth Canadian Edition Test Bank Ch no-13 Chapter 13 Copyright © 2010 John Wiley & Sons Canada, Ltd.Unauthorized copying, distribution, or transmission of this page is strictly prohibited 13-2 MULTIPLE CHOICE—Computational Answer No.Description b 37.Adjusting entry forzero-interest-bearing note.d 38.Journal entry for payment of interest-bearingnote.b 39.Determine amount of short-term debt to be reported.d 40.Determine amount of short-term debt to be reported.b 41.Calculate accounts receivable including sales taxes.b 42.Calculate cost of purchase for own use.c 43.Adjusting entry for unearned revenue.a 44.Calculate payroll tax expense.d 45.Payment of GST.b 46.Calculate vacation pay expense to be reported.c 47.Calculate accrued vacation pay liability.a 48.Expense approach to warranty.c 49.Adjusting entry for corporate income tax..d 50.Entry for asset retirement obligation.b 51.Entry for asset retirement obligationaccretion.b 52.Determine amount to accrue as a loss contingency.a 53.Revenueapproach to warranty.c 54.Calculate warranty liability(expense approach).d 55.Determine amount to accrue as a gain contingency.b 56.Calculate liability for unredeemed coupons.c 57.Calculate quick (acid-test) ratio.d 58.Calculate current ratio.a 59.Calculate days payables outstanding.b 60.Calculate net pay.MULTIPLE CHOICE—CPA Adapted Answer No.Description a 61.Knowledge of accounts payable.a 62.Determine amount of short-term debt to be reported.b 63.Determine current and long-term portions of debt.c 64.Determine accrued interest payable.a 65.Calculate accrued salaries payable.b 66.Calculate unearned service contract revenue.c 67.Calculateliability from unredeemed trading stamps.b 68.Accrual of payroll taxes.d 69.Determine range of loss accrual.c 70.CalculateGST/HST collected.b 71.Calculate asset retirement obligation.hzzled

Non-Financial and Current Liabilities Test Bank Ch no-13 Chapter 13 Copyright © 2010 John Wiley & Sons Canada, Ltd.Unauthorized copying, distribution, or transmission of this page is strictly prohibited 13-3

EXERCISES

Item Description E13-72 Notes payable.E13-73 Payroll entries.E13-74 Compensated absences.E13-75 Sales taxes.E13-76 Asset retirement obligation.E13-77 Contingent liabilities.E13-78 Premiums.E13-79 Premiums.

PROBLEMS

Item Description P13-80 Accounts and notes payable.P13-81 Refinancing of short-term debt.P13-82 Premiums.P13-83 Warranties.P13-84 Common types of current liabilities.P13-85 Employee related liabilities.P13-86 Asset retirement obligation.P13-87 Unredeemed coupons.P13-88 Contingences.hzzled

Test Bank for Intermediate Accounting, Ninth Canadian Edition Test Bank Ch no-13 Chapter 13 Copyright © 2010 John Wiley & Sons Canada, Ltd.Unauthorized copying, distribution, or transmission of this page is strictly prohibited 13-4 MULTIPLE CHOICE—Conceptual 1.The IASB current proposed definition of a liabilityis a.an account having a credit balance after closing entries are posted.b.a deferred credit that isrecognized and measured in conformity with generally accepted accounting principles.c.a present economic obligationfor which the entity is the obligor.d.an obligation to sell shares in the future.

2.According to the IASB current proposed definition, which of the following is NOT an essential characteristic of a liability?a.Itexists in the present time.b.There is certainty about the amount of future outflows.c.The obligation is enforceable on the obligor entity.d.It represents an economic burden or obligation.

3.An economic obligation is a.an unconditional promise to pay money in the future.b.an unconditional promise to provide or forego economic resources.c.an unconditional promise to provide or forego economic resources only if there is absolute certainty as to the amount.d.a conditional obligat ion which becomes unconditional if an uncertain future event occurs.

4.Among the short -term obligations of Lance Corp,onits most recent balance sheet date, are notes payable totalling $250,000 with the Provincial Bank. These are 90-day notes, renewable for another 90 -day period. These notes should be classified on the balance sheet of Lance Corpas a.current liabilities.b.deferred charges.c.long-term liabilities.d.shareholders’ equity.

5.Which of the following statements is NOTtrue about recognition and subsequent accounting for financial liabilities?a.They are initially recognized at their fair value.b.After acquisition, they continue to be accounted for at fair value.c.After acquisition, they are generally accounted forat amortized cost.d.Short term liabilities, such as accounts payable, are usually recorded at their maturity value.

6.Regardingzero-interest-bearing notes, a.they do not have an interest component.b.the debtor receives the future value of the note and pays back the present value.c.any interest is never recognized until the note is repaid.d.the debtor receives the present value of the note and pays back the future value.hzzled