Study with Quizlet and memorize flashcards containing terms like Which of the following statements about a current liability is true? A. It will be received in cash within one year or the current operating cycle. B. It will be paid in cash within one year or the current operating cycle. C. It will be paid in cash or fulfilled within one year or the current operating cycle, whichever is longer.
Study with Quizlet and memorize flashcards containing terms like On November 1, 2018, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2019. The journal entry on November 1, 2018 would include which of the following? A) credit to note payable $106,000 B) debit to cash $100,000 C) debit to interest expense $6,000 D ...
Transcribed image text: Knowledge Check 01 Which of the following statements about liabilities are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.
Any potential liability and related loss are described in a note to the financial statements.
Issued at a premium. On January 1, Duffy Enterprises issued $100,000 in bonds that mature in 10 years. The bonds were issued at face value. The bonds have a stated interest rate of 8% and pay interest once per year on December 31. Prepare the appropriate journal entry to record the issuance of the bonds.
Anderson Petroleum is involved in a lawsuit over the removal of underground gasoline storage tanks at the former site of one of its filling stations. Anderson's attorneys believe it is probable the outcome of the suit will be unfavorable, but can only estimate the loss within the range of $4 million to $8 million, with the minimum of $4 million being the most probable outcome. How should Anderson record this environmental liability?
A recently graduated staff auditor is reviewing evidence of the ability and intent to complete a refinancing of a short-term obligation. Which of the following should the auditor reject as being inadequate evidence for reclassification?
Cohle Industries has a taxable payroll of $350,000. The company is subject to a 6.2% FUTA tax rate and a 5.4% state contribution rate. However, due to Cohle's stable employment experience, the company's state rate has been reduced to 2%.
The footnotes to the financial statements should disclose (1) the nature of the contingency, and (2) an estimate of the possible loss or range of loss or a statement that an estimate cannot be made.
The obligation must be liquidated using cash, goods, or services that were earned by the entity in the performance of its normal business operation.
It should classify the note payable as a current liability and the accrued interest as a current liability.
no journal entry is made: disclose information in footnote to the financial statement
Any potential liability and related loss are described in a note to the financial statements.
Issued at a premium. On January 1, Duffy Enterprises issued $100,000 in bonds that mature in 10 years. The bonds were issued at face value. The bonds have a stated interest rate of 8% and pay interest once per year on December 31. Prepare the appropriate journal entry to record the issuance of the bonds.