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Exam 11: Current Liabilities

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Question 1

Multiple Choice

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The current portion of long-term debt:

A) Refers to the part of long-term debt that is due within one year.
B) Is shown separately from the long term portion on the balance sheet.
C) Must be disclosed.
D) Will be a known amount.
E) All of these answers are correct.

F) A) and B)
G) A) and C)

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Question 2

Multiple Choice

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Pending lawsuits:

A) Are always considered estimated liabilities.
B) Should always be recorded.
C) Should always be disclosed.
D) Should be disclosed if payment for damages is probable but the amount cannot be reliably estimated.
E) None of these answers is correct.

F) C) and E)
G) B) and C)

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Question 3

Multiple Choice

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A combined GST and PST rate of 12% applied to taxable supplies is called:

The employer should record payroll deductions as:

Provincial sales tax payable:

The difference between the amount received from a note payable and the amount repaid is:

Long-term liabilities:

On June 14,Cool Sports gave a 90-day note payable to Slip and Slide Co.,instead of cash payment of an overdue account.The amount of the note was $65,000 at an interest rate of 12%. Prepare the journal entry and determine the maturity date for Cool Sports to record payment of the note.

A pending lawsuit is an example of a contingent liability.

West Coast Outdoor Co.signed a $8,000,90-day,4% interest-bearing note payable at the bank in exchange for cash.Which of the following journal entries should West Coast Outdoor Co.use to record the note?

Estimated liabilities can arise from:

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

A company's obligations not expected to be paid within the longer of one year of the balance sheet date or the next operating cycle are reported as current liabilities.

A refund of GST would be received if the balance in the GST ________________ account exceeded the balance in the GST __________________ account.

Breathe Therapeutic Company is located in Medicine Hat,Alberta and is a retailer of massage supplies.Beginning inventory is $70,000,and Breathe uses the perpetual inventory system.Complete the journal entries on the following dates,including 5% GST as applicable.

Taxable goods or services on which GST is calculated and that include everything except zero-rated and exempt supplies are called ________________.

On November 15,Lohr Co.borrowed $20,000 from Convenient Bank.The loan had an interest rate of 12% and was due in 120 days. Prepare the journal entry to record the payment of the note on Lohr's books,assuming an adjusting entry was made at December 31^st ,Lohr Co.'s year end.

_____________ is to compensate the owner of note payable for its use by a borrower until payment is made.

Contingent liabilities are disclosed when the liability is not _______________ or it cannot be _______________.

A short-term note payable is a written promise to pay a specified amount on a specified future date within one year or the payee's operating cycle,whichever is shorter.