1. A current liability is any obligation of a business that:
a. is expected to be satisfied or paid within six months.
b. is expected to be satisfied or paid within two years.
c. a business will not be able to pay off.
d. is expected to be satisfied or paid within one year.
2. Floyd Corporation sells merchandise to a customer who pays $500 for the merchandise and $40 in sales tax. What amount will Floyd Corporation record as sales?
a. $500
b. $540
c. $460
d. $520
3. Which of the following is not a type of tax that is commonly withheld from an employee's paycheck?
a. Federal Income Tax
b. FICA Tax
c. Contribution Tax
d. State Income Tax
4. Which of the following statements is true?
i. A note payable can be classified as a current or long-term liability.
ii. Taxes payable are never current liabilities.
a. i only
b. ii only
c. Both i and ii
d. Neither i nor ii
5. A company issues a $2,000 6% note payable due in 4 months. How much interest will the company pay for this note?
a. $120
b. $0
c. $30
d. $40
6. When will Long-Term Debt be considered a current liability?
a. Never
b. In the first year of its issuance
c. Always
d. Whatever portion of the debt is due within one year of the balance sheet date will be considered current
7. Cash flows associated with long-term liabilities are reported:
a. in the operating activities section of the statement of cash flows.
b. in the investing activities section of the statement of cash flows.
c. in the financing activities section of the statement of cash flows.
d. on the balance sheet.
8. Which of the following is a financial instrument used by an entity to borrow money?
a. Bond
b. Check
c. Cash
d. Note Receivable