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ACCT 305 WEEK 5 QUIZ NEW

ACCT 305 WEEK 5 QUIZ NEW

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ACCT 305 WEEK 5 QUIZ NEW

1.  Question : (TCO 6) Which of the following is not a current liability?

Accounts payable.

A note payable due in 2 years.

Accrued interest payable.

Sales tax payable.

2. Question : (TCO 5) When the investor owns 60% of the outstanding stock of another company, the investor should:

Use the equity method.

Classify the investment as Available-for-Sale.

Consolidate the investee’s financial statements into their financial statements.

Classify the investment as Held-to-Maturity

 3. Question : (TCO 6) Which of the following is the best definition of a current liability?

An obligation payable within one year.

An obligation payable within one year of the balance sheet date.

An obligation payable within one year or within the normal operating cycle, whichever is longer.

An obligation expected to be satisfied with current assets or by the creation of other current liabilities.                

4. Question : (TCO 6) A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

More likely than not and the amount of the loss is known.

At least reasonably possible and the amount of the loss is known.

At least reasonably possible and the amount of the loss can be reasonably estimated.

Probable and the amount of the loss can be reasonably estimated.

5. Question : (TCO 6) Panther Co. had a warranty liability of $350,000 at the beginning of 2011, and $310,000 at end of 2011. Warranty expense is based on 4% of sales, which were $50 million for the year. What were the warranty expenditures for 2011?

$0.

$1,960,000.

$2,000,000.

$2,040,000.

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