ACC101-P2

All of the following are true of known liabilities except:

• Include accounts payable, notes payable, and payroll.

• Are obligations set by agreements, contracts, or laws.

• Are measurable.

• Are definitely determinable.

• May depend on some future event occurring.

Aaflajs of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

• Convertible stock.

• No-par stock.

• Callable stock.

• Noncumulative stock.

• Discounted stock.

Short-term notes payable:

• cannot replace an account payable.

• can be issued in return for money borrowed from a bank.

• are not negotiable.

• are a conditional promise to pay.

• rarely involve interest charges.

When a company is obligated for sales taxes payable, it is reported as a(n):

• Estimated liability.

• Long-term liability.

• Current liability.

• Business expense.

• Long-term liability.

An advantage of bonds is:

• Bonds do not affect owner control.

• Bonds require payment of par value at maturity.

• Bonds can decrease return on equity.

• Bond payments can be burdensome when income and cash flow are low.

• Bonds require payment of periodic interest.

Liability created by purchasing goods and services on credit (tín dụng) are:

• Accounts payable.

• Accounts receivable.

• Liabilities.

• Expenses.

• Equity.

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

• d. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.

• e. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.

How does Lead Company record by the billing of a client for $15,000 of service completed?

Moffat Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. What is the entry need to record when Moffat Company bill of a client for $25,000 of contract completed?

The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is: