ACC 312 EXAM 2 QUESTIONS AND CORRECT
ANSWERS
Accounts payable - Answers - Purchases of inventory
Notes Payable (due next year) - Answers - Prommisory note that bears interest
Customer advances and deposits - Answers - Layaway account is an example of this.
Unearned revenue - Answers - A liability created when a business collects cash from
customers in advance of providing services or delivering goods.
Sales tax payable - Answers - Sales tax collected from customers by the seller,
representing current liabilities payable to the government
current liability - Answers - Income tax payable is a ______ account.
Employee-Related Liabilities - Answers - Amounts owed to employees for salaries
health insurance pensions compensated absences example (vacation days, illness and
holidays)
Current maturities of long-term debt - Answers - a mortgage is an example of _______.
short-term obligations expected to be refinanced - Answers - Obligations that, after
refinancing, will be long-term and therefore not require the use of working capital during
the next year (or operating cycle).
current liabilities - Answers - obligation that is either paid or delivered in the coming
year.
gain contingencies - Answers - a very remote occurrence such as you might win the
lottery (Never occur in accounting)
Loss contingencies - Answers - Something that could happen that could hurt the
company (MSU example)
litigation, claims, and assessments - Answers - IRS assessing back taxes affects
anything that has a legal penalty.
Guarantee and warranty costs - Answers - a promise made by a seller to a buyer to
make good on a deficiency of quantity, quality, or performance in a product
ANSWERS
Accounts payable - Answers - Purchases of inventory
Notes Payable (due next year) - Answers - Prommisory note that bears interest
Customer advances and deposits - Answers - Layaway account is an example of this.
Unearned revenue - Answers - A liability created when a business collects cash from
customers in advance of providing services or delivering goods.
Sales tax payable - Answers - Sales tax collected from customers by the seller,
representing current liabilities payable to the government
current liability - Answers - Income tax payable is a ______ account.
Employee-Related Liabilities - Answers - Amounts owed to employees for salaries
health insurance pensions compensated absences example (vacation days, illness and
holidays)
Current maturities of long-term debt - Answers - a mortgage is an example of _______.
short-term obligations expected to be refinanced - Answers - Obligations that, after
refinancing, will be long-term and therefore not require the use of working capital during
the next year (or operating cycle).
current liabilities - Answers - obligation that is either paid or delivered in the coming
year.
gain contingencies - Answers - a very remote occurrence such as you might win the
lottery (Never occur in accounting)
Loss contingencies - Answers - Something that could happen that could hurt the
company (MSU example)
litigation, claims, and assessments - Answers - IRS assessing back taxes affects
anything that has a legal penalty.
Guarantee and warranty costs - Answers - a promise made by a seller to a buyer to
make good on a deficiency of quantity, quality, or performance in a product
