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Contingent assets are not reported in the statement True / False Questions 1. A company can exclude a short-term obligation from current liabilities if it intends to refinance the obligation and has an unconditional right to defer settlement of the obligation for at least 12 months following the due date. 2. Provisions are only recorded if it is likely that the company will have to settle an obligation at some point in the future. 3. ...

Other / Other 04 Apr 2016

Merritt Equipment Company sells computers 1 Kane Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $1.80; in addition it costs $1.20 to mail each mug. The results of the premium plan for the years 2014 and 2015 are as follows (assume all purchases and sales are for cash): 2014 2015 Coffee mugs purchased ...

Other / Other 04 Apr 2016

Sterling Co. includes one coupon in each bag of dog food 1 Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $5.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 4 ...

Other / Other 04 Apr 2016

Contingent liabilities are not reported in the financial statements True / False Questions 1. Short-term debt obligations are classified as current liabilities unless an agreement to refinance is completed before the financial statements are issued. 2. For purposes of recognizing a provision “probable” is defined as more likely than not 3. A provision differs from other liabilities in that there is greater uncertainty a ...

Other / Other 04 Apr 2016

Flavor Food Company distributes to consumers coupons 1. Wooten Co. is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Wooten's lawyer states that it is probable that Wooten will lose the suit and be found liable for a judgment costing Wooten anywhere from $1,600,000 to $8,000,000. However, the lawyer s ...

Other / Other 04 Apr 2016

Sandy Shoes Foot Inc. is involved in litigation Use the following information for questions 1 and 2. Vanco Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2013, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2013 may first be taken on January 1, 2014. Information relative to these employees is as follows: Hourly Vacation Days Earned Va ...

Other / Other 04 Apr 2016

The fire insurance premium covered premiums Pr. 1—Capitalizing acquisition costs. Gibbs Manufacturing Co. was incorporated on 1/2/10 but was unable to begin manufacturing activities until 8/1/10 because new factory facilities were not completed until that date. The Land and Building account at 12/31/10 per the books was as follows: Date Item Amount 1/31/10 Land and dilapidated building $200,000 2/28/10 Cost of removing ...

Other / Other 04 Apr 2016

Accrued liabilities are disclosed in financial statements P1. The ratio of current assets to current liabilities is called the a. current ratio. b. acid-test ratio. c. current asset turnover ratio. d. current liability turnover ratio. 2. Accrued liabilities are disclosed in financial statements by a. a footnote to the statements. b. showing the amount among the liabilities but not extending it to the liability total. c. an app ...

Other / Other 04 Apr 2016

Why is the liability section of the balance sheet 1. Of the following items, the only one which should not be classified as a current liability is a. current maturities of long-term debt. b. sales taxes payable. c. short-term obligations expected to be refinanced. d. unearned revenues. 2. An account which would be classified as a current liability is a. dividends payable in the form of a company's stock. b. accounts payableâ₠...

Other / Other 04 Apr 2016

The cause for litigation must have occurred on or before the date True or false: 1. The cause for litigation must have occurred on or before the date of the financial statements to report a liability in the financial statements. 2. Under the expense warranty approach, companies charge warranty costs only to the period in which they comply with the warranty. 3. Prepaid insurance should be included in the numerator when computing ...

Other / Other 04 Apr 2016