Acc305 Intermediate Accounting Week 5 Chapter 13 Current Liabilities and Contingencies (10 MCQs)

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Acc305 Intermediate Accounting 
Week 5 
Chapter 13 Current Liabilities and Contingencies 

1.  In exercise 13-11, requirement 1, which are statements below is false about the loss contingency? (Points: 5)
       This is a loss contingency. There may be a future sacrifice of economic benefits (cost of satisfying the warranty) due to an existing circumstance (the warranted awnings have been sold) that depends on an uncertain future event (customer claims). 
       The liability is probable because product warranties inevitably entail costs. 
       A reasonably accurate estimate of the total liability for a period is possible based on prior experience. 
       The estimated warranty liability is debited and warranty expense is credited in 2009, the period in which the products under warranty are sold. 

2.  In exercise 13-11, requirement 2, the amount to record as the accrued warranty expense is? (Points: 5)
       $145000 
       $155000 
       $150,000 

       $147000 

3. In exercise 13-11, ending warranty liability to be reported at the end of 2009 will be? 
(Points: 5)
       $187500 
       $112500 

       $150000 
       $37500 

4.  In problem 13-12, requirement 1, what is true about the calculation of the frequent flyer liability? (Points: 5)
       Transit’s frequent flyer program is offered in order to enhance revenues. Under the revenue recognition principle, the cost is properly recognized as an operating expense in the year sales are made (travel miles are earned) 
       Transit’s frequent flyer program is offered in order to enhance revenues. Under the matching principle, the cost is properly recognized as an capital expenditure in the year sales are made (travel miles are earned) 
       Transit’s frequent flyer program is offered in order to enhance revenues. Under the matching principle, the cost is properly recognized as an operating expense in the year sales are made (travel miles are earned) 
       Transit’s frequent flyer program is offered in order to enhance revenues. Under the matching principle, the Sales Price is properly recognized as an operating expense in the year sales are made (travel miles are earned)
  
5.  In exercise P13-12, requirement 1, what is the amount of 2009 travel expense liability ? (Points: 5)
       $27 million, 

       $32 million 
       $54 million 
       $40 million 

6. In problem 13-12, requirement 1, what is the amount of the year end liability that is the long term portion? 
(Points: 5)
       $40,000 
       $60,000 
       $75,000 
       $48,000 

7.  On Problem 13-13, what is the amount that you would debit to salaries and payroll expense? (Points: 5)
       Salaries and wages expense (total amount earned) 1,600,000 
       Salaries and wages expense (total amount earned) 1,800,000 
       Salaries and wages expense (total amount earned) 1,926,000 
       Salaries and wages expense (total amount earned) 2,000,000

8.  On Problem 13-13, what is the amount of social security taxes payable that will be reported as part of salaries and wage expense? (Points: 5)
       $189,000 
       $101,000 
       $124,000 
       $0 

9.  On Problem 13-13, the amount of payroll tax expense that will be debited is? (Points: 5)
       $234000 
       $277,000 
       $$28000 
       $176000 

10. On Problem 13-13, what is the amount of the salary and wage expense that will be debited related to fringe benefits? 
(Points: 5)
       $84,800 
       $120,000 
       $40,800 
       $124,800 

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