ACCOUNTING 200 EXAM 3 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Accrued interest expense will appear on the income
statement but not on the statement of cash flows. This
statement is
Answer:
True
Question:
2. Yang Company sold merchandise for $2,000. The event is
subject to a state sales tax of 9%. Based on this
information, Yang would be required to
Answer:
recognize sales tax liability of $180
Question:
3. Yang Company sold merchandise for $2,000 cash. The
event is subject to a state sales tax of 9%. Recognizing
the sale will require Yang to
Answer:
(All of the answers describe effects that would result from recognizing the sales
event.)
increase assets.
increase liabilities
increase revenue.
Question:
4. Standard Company has a contingent liability that has a
likelihood of actual occurrence that is classified
probable. Also, the amount of the liability can be
reasonably estimated. Under these circumstances,
Standard is required to
Answer:
recognize a liability and an expense in its financial statements
, Question:
5. According to GAAP a contingent liability can be
classified as
Answer:
(All of the answers describe classifications of contingent liabilities)
probable and estimable.
reasonably possible, or
probable but not
estimable.
remote.
Question:
6. Clayton Company borrowed $6,000 from the State Bank
on April 1, Year 1. The one-year note carried a 6% rate of
interest. The amount of interest expense that Clayton
would report in Year 1 and Year 2, respectively would be
Answer:
$270 and $90
Question:
7. Which of the following entities receives cash when a
company borrows money through a bond issue?
Answer:
Issuer
Question:
8. Both bonds payable and notes payable are obligations
that usually arise from borrowing money. This statement is
Answer:
True
Question:
9. A classified balance sheet separates assets and liabilities
into categories that distinguish between accounts that are
identified as current from those that are identified as
long-term. This statement is
Answer:
True
QUESTIONS AND CORRECT ANSWERS
Question:
1. Accrued interest expense will appear on the income
statement but not on the statement of cash flows. This
statement is
Answer:
True
Question:
2. Yang Company sold merchandise for $2,000. The event is
subject to a state sales tax of 9%. Based on this
information, Yang would be required to
Answer:
recognize sales tax liability of $180
Question:
3. Yang Company sold merchandise for $2,000 cash. The
event is subject to a state sales tax of 9%. Recognizing
the sale will require Yang to
Answer:
(All of the answers describe effects that would result from recognizing the sales
event.)
increase assets.
increase liabilities
increase revenue.
Question:
4. Standard Company has a contingent liability that has a
likelihood of actual occurrence that is classified
probable. Also, the amount of the liability can be
reasonably estimated. Under these circumstances,
Standard is required to
Answer:
recognize a liability and an expense in its financial statements
, Question:
5. According to GAAP a contingent liability can be
classified as
Answer:
(All of the answers describe classifications of contingent liabilities)
probable and estimable.
reasonably possible, or
probable but not
estimable.
remote.
Question:
6. Clayton Company borrowed $6,000 from the State Bank
on April 1, Year 1. The one-year note carried a 6% rate of
interest. The amount of interest expense that Clayton
would report in Year 1 and Year 2, respectively would be
Answer:
$270 and $90
Question:
7. Which of the following entities receives cash when a
company borrows money through a bond issue?
Answer:
Issuer
Question:
8. Both bonds payable and notes payable are obligations
that usually arise from borrowing money. This statement is
Answer:
True
Question:
9. A classified balance sheet separates assets and liabilities
into categories that distinguish between accounts that are
identified as current from those that are identified as
long-term. This statement is
Answer:
True
