Loveit

 

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

True

 

The present value of a bond is the value at which the bond would sell in the marketplace.

True

A note payable must always be paid before an account payable.

False

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

False

The interest coverage ratio measures a company's ability to meet its interest obligations as they come due.

True

Warranty liabilities are estimated based on product sales of the period and are debited when claims are honoured.

True

After the warranty liability has been established, the costs in the future will be recorded with a debit to Warranty Expense.

False

Liabilities arising from promotions (e.g., cash rebates) are an example of a contingent liability.

False

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

True

A $15,000, 9-month, 8% note payable requires an interest payment of $900 at maturity, if no interest was previously paid.

True

If bonds are issued at a discount, the issuing corporation will repay an amount less than the face amount of the bonds on the maturity date.

False

Debt financing will mean the company will pay less corporate income tax.

True

A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable.

true

Instalment notes with blended principal and interest payments apply a fixed amount to the principal balance of the note with each payment.

False

 

Current Liabilities are usually listed in order of maturity.

True

A future commitment is NOT considered a liability unless a present obligation also exists.

True

If bonds sell at a premium, the interest expense recognized each year will be greater than the contractual rate of interest.

False

A contingent loss should be recorded in the accounts if it is likely that the contingency will actually occur, even if the amount of loss cannot be reasonably estimated.

False

Secured bonds are issued against the general credit of the borrower.

False

Shareholder equity is unaffected by the issuance of long term debt.

True

Accunlated amortizatio is only recognized on natrual resources that have been extracted and sold and sold during the period

False

Copyrights give owners an exclusive right to reproduce and sell an artistic work

True

False

False

False

False

False

False

true

False

Retailers and service companies are both considered merchandising companies.

False

 

A company can improve its profit margin by increasing its gross profit margin.

true

Goods that have been purchased FOB destination point but are in transit at year end should be included in the seller’s physical inventory count.

True

Net purchases is determined by subtracting purchase returns & allowances and purchase discounts from total purchases than adding freight in (transportation-in).

True

Purchases is a temporary account reported on the Income Statement like an expense as it decreases owner's equity.

True

Cost of goods available for sale, in a periodic inventory system, is deducted from beginning inventory to determine cost of goods sold.

False

When a customer returns defective merchandise to the vendor, the company would debit the Sales Revenue account for the value of the inventory returned (net of tax).

False

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

True

A perpetual inventory system requires a physical inventory count to determine the cost of goods sold.

False

Under a periodic inventory system, the inventory account is updated when the sale is recorded

False

The inventory turnover ratio measures the average value of a merchandising company’s inventory during the year.

False

Use of the LIFO inventory cost flow assumption is not permitted for Canadian income tax purposes.

True

 

An error that understates the ending inventory will also cause net income for the period to be understated.

true

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under the FIFO and average cost formulas.

true

If sales terms are FOB destination, the buyer is responsible for getting the goods to their intended destination.

False

Yang Company overstated its 2021 ending inventory by $8,000; as a result, 2021 net income will be overstated by the same amount.

True

If a company changes its inventory cost flow assumption, the effect of the change should be disclosed in the financial statements.

True

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

False

The Li Company has $100,000 in inventory in its warehouse. The company has goods in transit of $5,000 shipped from a supplier FOB shipping point. Included in the items counted in the warehouse is $1,200 in goods held on consignment from a local manufacturer. Li's correct inventory balance is $105,000.

False

Yuga Company has a cost of goods purchased of $82,000, beginning inventory of $34,000 and ending inventory of $44,000. The company's cost of goods available for sale is $72,000.

False

True

False

True

False

False

True

False

true

false

True

False

true

False

true

True

true

true

False

False

True

True

False

true

False

False

True

False

True

True

True

False

True

False

True