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TEST BANK
Glen Stanger Lianne Smith-Stow
ACCOUNTING
Ninth Canadian Edition Volume 2 Charles T. Horngren / Walter T. Harrison / Jo-Ann L. Johnston Carol A. Meissner / Peter R. Norwood 1 / 4
Accounting Volume Two, Ninth Canadian Edition Horngren, Harrison, Johnston, Meissner, Norwood Copyright © 2014 Pearson Canada Inc.Table of Contents Chapter 11: Current Liabilities and Payroll .....................................................................................1 Chapter 12: Partnerships ................................................................................................................74 Chapter 13: Corporations: Share Capital and the Balance Sheet .................................................151 Chapter 14: Corporations: Retained Earnings and the Income Statement ...................................230 Chapter 15: Long-Term Liabilities ..............................................................................................274 Chapter 16: Investments and International Operations ................................................................374 Chapter 17: The Cash Flow Statement ........................................................................................458 Chapter 18: Financial Statement Analysis ...................................................................................532 2 / 4
1 © 2014 Pearson Canada Inc.Accounting, Vol. 2, 9e Cdn. Ed. (Horngren) Chapter 11 Current Liabilities and Payroll Objective 11-1 1) Accrued interest on a note payable should be credited to interest payable.
Answer: TRUE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
2) Interest payable is a contra liability account and is deducted from the note payable on the balance sheet.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
3) A $45,000, 10%, 90-day note payable comes to maturity. The amount to be paid at maturity including interest is $43,890.41.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Application
Objective: 11-1 Account for current liabilities of known amount
4) An unearned revenue arises when a company receives cash from its customers in advance of earning the revenue.
Answer: TRUE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
5) Current portion of long-term debt refers to the amount of principle on a note payable that must be paid within a year.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount 3 / 4
2 © 2014 Pearson Canada Inc.6) The entry to record unearned revenue received in advance includes a debit to unearned revenue and a credit to cash.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
7) Sales tax payable is recorded as a debit when recording a sale of merchandise.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
8) The failure to record an accrued liability causes a company to overstate its net income.
Answer: TRUE
Diff: 3 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Comprehension
Objective: 11-1 Account for current liabilities of known amount
9) The only way to reduce a current liability is to pay out cash.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Comprehension
Objective: 11-1 Account for current liabilities of known amount
10) Operating lines of credit are popular because they do not carry any interest charges.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
11) Interest must be accrued on all current notes payable. For long-term notes the interest is accrued at the maturity of the note.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
12) Notes payable normally require the borrower to pay interest.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount
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