INTERMEDIATE ACCOUNTING 2- INTRODUCTION TO LIABILITY

Which of the following is a current liability?

• Preferred dividends in arrears

• A dividend payable in the form of additional shares of stock

• A cash dividend payable to preferred stockholders

• All of these

Which of the following is not true about the discount on short-term notes payable?

• The Discount on Notes Payable account has a debit balance.

• The Discount on Notes Payable account should be reported as an asset on the balance sheet

• When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate.

Which of the following may be a current liability?

• Withheld Income Taxes

• Deposits Received from Customers

• Deferred Revenue

• All of these

Which of the following are not factors that are considered when evaluating whether or not to record a liability for pending litigation?

• Time period in which the underlying cause of action occurred

• The type of litigation involved.

• The probability of an unfavorable outcome.

• The ability to make a reasonable estimate of the amount of the loss.

An account which would be classified as a current liability is

• dividends payable in the company's stock.

• accounts payable—debit balances.

• losses expected to be incurred within the next twelve months in excess of the company's insurance coverage.

• none of these.

Legally enforceable as a consequence of binding contract or statutory requirement.

Give rise to liability by reason of normal business practice, custom and a desire to maintain good business relations or act in equitable manner.

The ____ _____that leads to a legal or constructive obligation is known as the obligating events.

 ? – consist of cash or property received from customers but which are refundable after compliance with certain conditions.

Large entities often compensate key officers and employees by way of ----- for superior income realized during the year.