1. Liabilities: A.) Must be certain B.) Must sometimes be estimated C.) Must be for a specific amount D.) Must always have a definite date for payment E.) Must involve an outflow of cash 2. Contingent liabilities can be: A.) Probable B.) Remote C.) Reasonably possible D.) Estimable E.) All of the above 3.) Contingent liabilities must be recorded if: A.) The future event is probable and the amount owed can be reasonably estimated B.) The future event is remote C.) The future event is reasonably possible D.) The amount owed cannot be reasonably estimated E.) All of the above 4. The times interest earned ratio reflects: A.) A company's ability to pay its operating expenses on time B.) A company's ability to pay interest even if sales decline C.) A company's profitability D.) The relation between income and debt E.) The relation between assets and liabilities 5.) If the interest ratio: A.) Increases, then risk increase B.) Increases, then risk decreases C.) Is greater than 1.5, then the company is in default D.) Is less than 1.5, the company is carrying too little debt E.) Is greater than 1.5, the company is likely carrying too much debt