Accounting and Liability Concepts Worksheet

Short-term notes payable: Are normally categorized as noncurrent liabilities. Cannot replace an account payable. Rarely involve interest charges. Can be issued in return for money borrowed from a bank.

• Are a conditional promise to pay.

• Are normally categorized as noncurrent liabilities.

• Cannot replace an account payable.

• Rarely involve interest charges.

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

When a note comes due, the difference between the amount borrowed and the amount repaid is:

• Principal

• Face Value

• Interest

• Accounts Payable

• Cash

Which of the following pertaining to known liabilities is false?

• They are measurable.

• They include accounts payable, notes payable, and payroll obligations.

• They can arise from laws.

• They can arise from agreements or contracts.

• They may depend on a future event occurring.

Contingent liabilities are recorded or disclosed in the financial statement notes unless they are:

• Reasonably possible

• Probable and estimable

• Remote (very unlikely)

• Possible and estimable

• Probable and not estimable

Gross pay is:

• Take-home pay.

• Total compensation earned by an employee before any deductions.

• Salaries after taxes are deducted.

• Deductions withheld by an employer.

The amount of the paycheck Liabilities that are due within one year (or the company’s operating cycle if longer) are:

• Long-term liabilities

• Operating cycle liabilities

• Current liabilities

• Bills

• Current assets

Federal Unemployment Taxes (FUTA) are:

• Employee income taxes.

• Unemployment taxes.

• Employee deductions.

• Medicare taxes.

• Social Security taxes.

Which of the following does not result in an estimated liability?

• Warranties

• Vacation benefits

• Bonuses

• Pension benefits

• Unearned revenues

An estimated liability: Is not recorded until the amount is known for certain. Can be the result of a lawsuit. Is an unknown liability of a certain amount. Is a known obligation of an uncertain amount that can be reasonably estimated.

• Is not recorded until the amount is known for certain.

• Can be the result of a lawsuit.

• Is an unknown liability of a certain amount.

• Is a known obligation of an uncertain amount that can be reasonably estimated.

• Is a liability that may occur if a future event occurs.

Accounts payable are: Also referred to as unearned revenues. Amounts received in advance from customers for future services. Estimated liabilities. Amounts owed to suppliers for products or services purchased on credit.

• Also referred to as unearned revenues.

• Amounts received in advance from customers for future services.

• Estimated liabilities.

• Amounts owed to suppliers for products or services purchased on credit.

• Always payable within 30 days.