Test Bank For Accounting Volume 2 Canadian 9th Edition Horngren

Accounting, Vol. 2, 9e Cdn. Ed. (Horngren) Chapter 11 Current Liabilities and Payroll

Objective 11-11) Accrued interest on a note payable should be credited to interest payable. Answer: TRUEDiff: 1 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilitiesSkill: KnowledgeObjective: 11-1 Account for current liabilities of known amount2) Interest payable is a contra liability account and is deducted from the note payable on the balance sheet.Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount3) A $45,000, 10%, 90-day note payable comes to maturity. The amount to be paid at maturity including interest is $43,890.41.Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: ApplicationObjective: 11-1 Account for current liabilities of known amount4) An unearned revenue arises when a company receives cash from its customers in advance of earning the revenue.Answer: TRUEDiff: 1 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount5) Current portion of long-term debt refers to the amount of principle on a note payable that must be paid within a year.Answer: TRUEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount1© 2014 Pearson Canada Inc.

6) The entry to record unearned revenue received in advance includes a debit to unearned revenue and a credit to cash.Answer: FALSEDiff: 1 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount7) Sales tax payable is recorded as a debit when recording a sale of merchandise. Answer: FALSEDiff: 1 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilitiesSkill: KnowledgeObjective: 11-1 Account for current liabilities of known amount8) The failure to record an accrued liability causes a company to overstate its net income. Answer: TRUEDiff: 3 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilitiesSkill: ComprehensionObjective: 11-1 Account for current liabilities of known amount9) The only way to reduce a current liability is to pay out cash. Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: ComprehensionObjective: 11-1 Account for current liabilities of known amount10) Operating lines of credit are popular because they do not carry any interest charges. Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilitiesSkill: KnowledgeObjective: 11-1 Account for current liabilities of known amount11) Interest must be accrued on all current notes payable. For long-term notes the interest is accrued at the maturity of the note.Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount12) Notes payable normally require the borrower to pay interest. Answer: TRUEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount2© 2014 Pearson Canada Inc.

13) A $15,000, 8%, 9-month note payable requires an interest payment of $900 at maturity, if no interest was previously paid.Answer: TRUEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: ApplicationObjective: 11-1 Account for current liabilities of known amount14) The rate of provincial sales taxes is the same in every province. Answer: FALSEDiff: 1 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount15) The Federal Government collects all the PST and GST for the country and then passes on the collection of the PST to the individual provincial governments.Answer: FALSEDiff: 2 Type: TFLearning Outcome: A-12 Define and record current and contingent liabilities Skill: KnowledgeObjective: 11-1 Account for current liabilities of known amount