ACG 2071 EXAM 3 ACTUAL TEST
QUESTIONS AND ACCURATE ANSWERS
COMPLETE REVIEW SHEET
●● liabilities
Answer: Liability: An obligation of a company to transfer some
economic benefit in the future
Most liabilities require the payment of cash in the future
Ex. Accounts payable, Notes payable, Salaries payable
Some liabilities, arise when a company receives cash in
advance from customers
Ex. Deferred Revenue
Represent an obligation of the company to transfer inventory
or services to those customers in the future
●● Current vs long term liabilities
Answer: when it is due
current = due within one year of balance sheet
long -term: payable in more than one year from the balance sheet date
●● accounts payable
,Answer: represent the amount owed to suppliers of merchandise or
services
sometimes are referred to as trade accounts payable
current liabilities normally
●● payroll liabilities
Answer: make up a significant portion of current liabilities for labor
intensive companies
salaries payable are a current liabilitiy that reflext the amount owed, but
not yet paid, to employees for their pas work
other payroll costs include: federal and state unempmloyment taxes,
employer's matched portion of ss and medicar tax,
employers contributions for health, disability, and life insurance,
employer's contributions to retirement plans
●● other current liabilities
Answer: deferred revenue, sales tax payable, current portion long term
debt( debt that will be paid within one year of the balance sheet date)
●● Recording notes payable:Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount
borrowed plus accrued interest due June 1, 2026
, Answer: interest incurred:
full 6 months 100k x6% x 6/12 = 3000
however period ends on december 31st, 1 month later
so 100k x 6% x 1/12 =500 interest incurred
●● notes payable
Answer: note signed by a firm promising to repay the amount borrowed
plus interest
interest on notes is calculated as
interest = face amount x annual interest rate x fraction of the year
●● recording notes payable Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount borrowed
plus accrued interest due June 1, 2026. December 1st entry
Answer: cash 100k
notes payable 100k
●● recording notes payable Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount borrowed
plus accrued interest due June 1, 2026. December 31st entry
Answer: interest expense 500
QUESTIONS AND ACCURATE ANSWERS
COMPLETE REVIEW SHEET
●● liabilities
Answer: Liability: An obligation of a company to transfer some
economic benefit in the future
Most liabilities require the payment of cash in the future
Ex. Accounts payable, Notes payable, Salaries payable
Some liabilities, arise when a company receives cash in
advance from customers
Ex. Deferred Revenue
Represent an obligation of the company to transfer inventory
or services to those customers in the future
●● Current vs long term liabilities
Answer: when it is due
current = due within one year of balance sheet
long -term: payable in more than one year from the balance sheet date
●● accounts payable
,Answer: represent the amount owed to suppliers of merchandise or
services
sometimes are referred to as trade accounts payable
current liabilities normally
●● payroll liabilities
Answer: make up a significant portion of current liabilities for labor
intensive companies
salaries payable are a current liabilitiy that reflext the amount owed, but
not yet paid, to employees for their pas work
other payroll costs include: federal and state unempmloyment taxes,
employer's matched portion of ss and medicar tax,
employers contributions for health, disability, and life insurance,
employer's contributions to retirement plans
●● other current liabilities
Answer: deferred revenue, sales tax payable, current portion long term
debt( debt that will be paid within one year of the balance sheet date)
●● Recording notes payable:Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount
borrowed plus accrued interest due June 1, 2026
, Answer: interest incurred:
full 6 months 100k x6% x 6/12 = 3000
however period ends on december 31st, 1 month later
so 100k x 6% x 1/12 =500 interest incurred
●● notes payable
Answer: note signed by a firm promising to repay the amount borrowed
plus interest
interest on notes is calculated as
interest = face amount x annual interest rate x fraction of the year
●● recording notes payable Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount borrowed
plus accrued interest due June 1, 2026. December 1st entry
Answer: cash 100k
notes payable 100k
●● recording notes payable Dec. 1 2025, ABC Inc borrows $100,000
from Bank of
America, signing a 6%, 6-month not for the amount borrowed
plus accrued interest due June 1, 2026. December 31st entry
Answer: interest expense 500
