Ch10

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18 Questions - Developed by: Karli - Developed on: - 3.782 taken

Acc201

  • 1
    The relationship between current liabilities and current assets is important in evaluating a company's ability to pay off its long-term debt
  • 2
    A company whose current liabilities exceed its current assets may have a liquidity problem
  • 3
    Notes payable usually require the borrower to pay interest
  • 4
    Notes payable are often used instead of accounts payable
  • 5
    A note payable must always be paid before an account payable
  • 6
    A $60000,8%, 9 month note payable requires an interest payment of $3600 at maturity
  • 7
    Most notes are not interest bearing
  • 8
    With an interest bearing note, the amount of cash received upon issuance of the note generally exceeds the notes face value
  • 9
    Interest expense on a note payable is only recorded at maturity
  • 10
    Interest expense is reported under other expenses and losses in the income statement
  • 11
    Unearned revenues should be classified as other revenues and gains on the income statement
  • 12
    The higher the sales tax rate, the more profit a retailer can earn
  • 13
    Metropolitan Symphony sells 200 season tix for 50000 that represents a five concert season. the amount of Unearned Ticket Revenue after the second concert is 20000
  • 14
    During the month, a company sells goods for a total of $108,000, which includes sales taxes of $8k; therefore the company should recognize $100k in Sales Revenue and $8k in sales tax expense
  • 15
    Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year
  • 16
    The current ration permits analysts to compare the liquidity of different sized companies
  • 17
    Working capital is current assets divided by current liabilities
  • 18
    FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions

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