Question $1(2$ points$)$

The ratio of current assets to current liabilities is called the

Question $1$ options:

current liability turnover ratio.

current asset turnover ratio.

acid$-$test ratio.

current ratio.

Question $2(2$ points$)$

Where is debt callable by the creditor reported on the debtor's financial statements?

Question $2$ options:

Current liability.

Current liability if it is probable that creditor will call the debt within the year, otherwise a long$-$term liability.

Current liability if the creditor intends to call the debt within the year, otherwise a long$-$term liability.

Long$-$term liability.

Question $3(2$ points$)$

The effective interest on a $12-$month, zero$-$interest$-$bearing note payable of $$300,000,$ discounted at the bank at $8\%$ is

Question $3$ options:

$8\mathrm{.}70\%.$

$11\mathrm{.}49\%.$

$8\%.$

$8\mathrm{.}51\%.$

Question $4(2$ points$)$

Use of the accrual method in accounting for product warranty costs

Question $4$ options:

represents accepted practice and should be used whenever the warranty is an integral and inseparable part of the sale.

finds the expense account being charged when the seller performs in compliance with the warranty.

is frequently justified on the basis of expediency when warranty costs are immaterial.

is required for federal income tax purposes.

Question $5(2$ points$)$

What condition is necessary to recognize an asset retirement obligation?

Question $5$ options:

Obligation event has occurred.

Company has an existing legal obligation.

Company can reasonably estimate the amount of the liability.

Company has an existing legal obligation and can reasonably estimate the amount of the liability.

Question $6(2$ points$)$

Among the short$-$term obligations of Lance Company as of December $31,$ the balance sheet date, are notes payable totaling $$250,000$ with the Madison National Bank. These are $90-$day notes, renewable for another $90-$day period. These notes should be classified on the balance sheet of Lance Company as

Question $6$ options:

current liabilities.

deferred charges.

long$-$term liabilities.

intermediate debt.

Question $7(2$ points$)$

When is a contingent liability recorded?

Question $7$ options:

When the future events will possibly occur and the amount can be reasonably estimated.

When the future events are probable to occur.

When the future events are probable to occur and the amount can be reasonably estimated.

When the amount can be reasonably estimated.

Question $8(2$ points$)$

Stine Co$.$ is a retail store operating in a state with a $6\%$ retail sales tax. The retailer may keep $2\%$ of the sales tax collected. Stine Co$.$ records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $$222,600.$

The amount of sales taxes $($to the nearest dollar$)$ for May is

Question $8$ options:

$$14,157.$

$$13,356.$

$$12,600.$

$$13,089.$

Question $9(2$ points$)$

Accrued liabilities are disclosed in financial statements by

Question $9$ options:

appropriately classifying them as regular liabilities in the balance sheet.

an appropriation of retained earnings.

showing the amount among the liabilities but not extending it to the liability total.

a footnote to the statements.

Question $10(2$ points$)$

Which of the following contingencies need not be disclosed in the financial statements or the notes thereto?

Question $10$ options:

All of these must be disclosed.

Guarantees of indebtedness of others

Environmental liabilities that cannot be reasonably estimated

Probable losses not reasonably estimable

Question $11(2$ points$)$

Which of the following is a condition for accruing a liability for the cost of compensation for future absences$?$

Question $11$ options:

All of these are conditions for the accrual.

The obligation is attributable to employee services already performed.

Payment of the compensation is probable.

The obligation relates to the rights that vest or accumulate.

Question $12(2$ points$)$

Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?

Question $12$ options:

Event is unusual in nature and event occurs infrequently.

Event is unusual in nature and occurrence of event is probable.

Amount of loss is reasonably estimable and occurrence of event is probable.

Amount of loss is reasonably estima