Test Bank for Horngren's Accounting, Volume 2, 12th Canadian Edition by Tracie Miller-Nobles

Horngren's Accounting, Vol. 2, Cdn. Ed., 12e (Miller-Nobles)
Test Bank Chapter 11 Current Liabilities and Payroll

11.1 Account for current liabilities of a known amount

1) Accrued interest on a note payable should be credited to interest payable.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.2.2 Evaluates treatment for routine transactions
Objective: 11-1 Account for current liabilities of known amount
Knowledge Taxon: Factual
Cognitive Taxon: Remember

2) Interest payable is a contra liability account and is deducted from the note payable on the balance
sheet.
Answer: FALSE
Diff: 2 Type: TF
CPA Competency: 1.2.2 Evaluates treatment for routine transactions
Objective: 11-1 Account for current liabilities of known amount
Knowledge Taxon: Factual
Cognitive Taxon: Remember

3) 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: FALSE
Diff: 2 Type: TF
CPA Competency: 1.2.2 Evaluates treatment for routine transactions
Objective: 11-1 Account for current liabilities of known amount
Knowledge Taxon: Procedural
Cognitive Taxon: Apply

4) An unearned revenue arises when a company receives cash from its customers in advance of earning
the revenue.
Answer: TRUE
Diff: 1 Type: TF
CPA Competency: 1.2.2 Evaluates treatment for routine transactions
Objective: 11-1 Account for current liabilities of known amount
Knowledge Taxon: Factual
Cognitive Taxon: Remember

5) Current portion of long-term debt refers to the amount of principle on a note payable that must be paid
within a year or an operating cycle.
Answer: TRUE
Diff: 2 Type: TF
CPA Competency: 1.2.2 Evaluates treatment for routine transactions
Objective: 11-1 Account for current liabilities of known amount
Knowledge Taxon: Factual
Cognitive Taxon: Remember

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