Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Question
Chapter 11, Problem 11.7CP
A.
To determine
- Remote
- Reasonably possible
- Probable
To state: the major business units of Incorporation R.
B.
To determine
To explain: the reason for Incorporation R requiring so many pages of contingency liabilities.
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Match the following terms or phrases in (a–g) with the explanations in 1–8. Terms or phrases may be used more than once.
Question 11 options:
Current assets/Current liabilities
Probable likelihood and estimable liability
Measures the “instant” debt-paying ability of a company
Current assets – Current liabilities
(Cash + Temporary investments + Accounts receivable)/Current liabilities
Cash + Temporary investments + Accounts receivable
Probable likelihood of a liability but cannot be estimated
Remote contingent liability
Reasonably possible likelihood of a liability
1.
Current ratio
2.
Working capital
3.
Quick assets
4.
Quick ratio
5.
Record an accrual and disclose in the notes to the financial statements
6.
Disclose only in notes to financial statements
7.
No disclosure needed in notes to financial statements
Most companies pay current liabilities
Select one:
a. out of current assets.
b. by issuing interest-bearing notes payable.
C. by issuing stock.
d. by creating long-term liabilities.
Visit the website of the US Securities and Exchange Commission (SEC) https://www.sec.gov/edgar/searchedgar/companysearch.html Search for the latest Form 10-K for a company you would like to analyze. Submit a short memo that
A. Includes the name of the company you have chosen.B. Review the company’s end-of-period Balance Sheet to determine the following:
Total assets
Total liabilities
Total equity
C. Compare beginning and ending Assets totals and discuss the amount of change.D. Compare beginning and ending Liabilities totals and discuss the amount of change.E. Compare beginning and ending Equity totals and discuss the amount of change.
Please provide a link to the company’s Form 10-K to allow accurate verification of your answers.
Chapter 11 Solutions
Accounting
Ch. 11 - Does a discounted note payable provide credit...Ch. 11 - Employees are subject to taxes withheld from their...Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - To match revenues and expenses properly, should...Ch. 11 - Prob. 8DQCh. 11 - When should the liability associated with a...Ch. 11 - Prob. 10DQ
Ch. 11 - Proceeds from notes payable On May 15, Maynard Co....Ch. 11 - Proceeds from notes payable On January 26, Nyree...Ch. 11 - Prob. 11.2APECh. 11 - Prob. 11.2BPECh. 11 - Prob. 11.3APECh. 11 - Prob. 11.3BPECh. 11 - Journalize period payroll The payroll register of...Ch. 11 - Prob. 11.4BPECh. 11 - Journalize payroll tax The payroll register of...Ch. 11 - Prob. 11.5BPECh. 11 - Prob. 11.6APECh. 11 - Prob. 11.6BPECh. 11 - Prob. 11.7APECh. 11 - Estimated warranty liability Quantas Industries...Ch. 11 - Quick ratio Nabors Company reported the following...Ch. 11 - Quick ratio Adieu Company reported the following...Ch. 11 - Current liabilities Born Nebo Co. sold 25,000)...Ch. 11 - Entries for notes payable Cosimo Enterprises...Ch. 11 - Entries for discounting notes payable Ramsey...Ch. 11 - Evaluating alternative notes A borrower has two...Ch. 11 - Entries for notes payable A business issued a...Ch. 11 - Entries for discounted note payable A business...Ch. 11 - Entries for notes payable Bull City Industries is...Ch. 11 - Prob. 11.8EXCh. 11 - Calculate payroll An employee cams 25 per hour and...Ch. 11 - Calculate payroll Breakin Away Company has three...Ch. 11 - Summary payroll data In the following summary of...Ch. 11 - Payroll tax entries According to a summary of the...Ch. 11 - Prob. 11.13EXCh. 11 - Prob. 11.14EXCh. 11 - Prob. 11.15EXCh. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Prob. 11.18EXCh. 11 - Prob. 11.19EXCh. 11 - Prob. 11.20EXCh. 11 - Accrued product warranty General Motors...Ch. 11 - Prob. 11.22EXCh. 11 - Quick ratio Gmeiner Co. had the following current...Ch. 11 - Quick ratio The current assets and current...Ch. 11 - Liability transactions The following items were...Ch. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data on employer FICA tax...Ch. 11 - Prob. 11.4APRCh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 11.1BPRCh. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data and employer FICA tax...Ch. 11 - Prob. 11.4BPRCh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 3CPPCh. 11 - Ethics in Action Tonya Latirno is a staff...Ch. 11 - Prob. 11.2CPCh. 11 - Communication WBM Motorworks is a manufacturer of...Ch. 11 - Prob. 11.6CPCh. 11 - Prob. 11.7CP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Accounting for liabilities involves recording and managing obligations a company owes to external parties. Liabilities are classified based on their nature and timing of settlement. Common types include: Current Liabilities: Debts or obligations expected to be settled within one year or the operating cycle, whichever is longer. Examples include accounts payable, accrued expenses, and short-term loans. Long-Term Liabilities: Obligations not due within the next operating cycle or one year. Examples include long-term loans, bonds payable, and lease obligations. Contingent Liabilities: Potential obligations that depend on a future event, such as lawsuits or warranties. They are disclosed in the footnotes of financial statements unless the likelihood of payment is remote. Deferred Revenue: Payments received in advance for goods or services to be provided in the future. They are recorded as liabilities until the revenue recognition criteria are met. Accrued Liabilities: Expenses…arrow_forwardListed below are several terms and phrases associated with current liabilities. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. List A List B 1. An IOU promising to repay the amount borrowed plus interest. 2. Payment amount is reasonably possible and is reasonably estimable. 3. Mixture of liabilities and equity a business uses. 4. Payment amount is probable and is reasonably estimable. 5. A liability that requires the sacrifice of something other than cash. 6. Long-term debt maturing within one year. 7. FICA and FUTA. 8. Informal agreement that permits a company to borrow up to a prearranged limit. 9. Classifying liabilities as either current or longterm helps investors and creditors assess this. 10. Amount of note payable × annual interest rate × fraction of the year. a. Recording of a contingent liability. b. Deferred revenue. c. The riskiness of a business’s obligations. d. Disclosure of a contingent liability.…arrow_forwardWhich of the following statements regarding liabilities is false? Multiple Choice A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events. Potential future wages to be paid to employees should be recorded as liabilities. Long-term liabilities are obligations due after one year, or the company’s operating cycle if longer. Liabilities are classified as either current or long term. Liabilities can involve uncertainty in whom to pay.arrow_forward
- d accounts payable Which of the following is NOT a reason long-term liabilities are significant to users? They represent principal and interest payments the corporation has to pay. They affect the company for many years in the future. C They have an impact on the corporation's quick ratio. d They provide information on the corporation's contractual obligations. a barrow_forwardCurrent liabilities a. May include contingent liabilities.b. Include obligations payable within one year or one operating cycle, whichever is shorter.c. Can be satisfied only with the payment of cash.d. Are preferred by most companies over long-term liabilities.arrow_forwardWhich of the following liabilities is created when a company receives cash for services to be provided in the future? A. Unearned Revenue B. Estimated Warranty Payable C. Accrued Liability D. Accounts Payablearrow_forward
- Please provide a solution to this problem and explain thoroughly why is that your answer. Questions: 1. As of December 31 of this year, the total current liabilities to be reported in the company's statement of financial position should be at what amount? Answer: 450,000 2. As of December 31 of this year, the total non-current liabilities to be reported in the company's statement of financial position should be at what amount? Answer: 0arrow_forwardPrepare the long-term liabilities section of the balance sheet. SHERIDAN COMPANY Balance Sheet (Partial)arrow_forwardWhat is the relationship between current liabilities and a company's operating cycle? Select one: а. Current liabilities are the result of operating transactions. O b. There is no relationship between the two. O c. Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less). O d. Current liabilities can't exceed the amount incurred in one operating cycle.arrow_forward
- Current Liabilities The following items are accounts on Smiths balance sheet of December 31, 2016: Required Identify which of the accounts should be classified as a current liability on Smiths balance sheet. For each item that is not a current liability, indicate the category of the balance sheet in which it would be classified. Assume the company has the following balance sheet categories: current asset; property, plant, and equipment; long-term investment; intangible asset; current liability; long-term liability; and stockholders equity.arrow_forwardClassified Balance Sheet Identify whether the proper classification for each account: Accounts receivable [Select] [ Select ] Current Liabilities Long-term Investments Current Assets Accounts payable Property, Plant and Equipment Equipment (Select ] Mortgage payable [ Select ) Owner's capital [Select] Stock Investments ISelect]arrow_forwardSelect all of the true statements. 1) Full disclosure principle requires that companies must disclose all circumstances and events that may affect decisions made by investors and other users. 2) In order for information to be relevenat, it must be reported on a monthly basis. 3) The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments. 4) The conomic entity assumption states that assets should be recorded at their cost. 5) Materiality relates to whether an item is large enough to likely influence the decision of an investor or creditor.arrow_forward
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