ch 9: current liabilities

Question 1

current liabilities

Answer 1

liabilities due within a year

Question 2

long term liabilities

Answer 2

liabilities due after one year (or cycle)

-notes payable

Question 3

known liabilities

Answer 3

measureable obligations arising from agreements

-acc pay,notespay,sales tax, unearened rev

Question 4

sales tax pay entry

Answer 4

D-cash
C-sales
C-sales tax pay

Question 5

unearned rev entry

Answer 5

D-cash
C-unearned rev

Question 6

short term payabke

Answer 6

written promise to pat a specified amount on a future date WITHIN a year

Question 7

2 short term note payable transactions

Answer 7

1-note to extend period
2-note given to borrow money

Question 8

note given to extend credit period entry

Answer 8

D-acc pay
C-cash
C-notes pay

Question 9

note given to extend is due entry

Answer 9

D-notes pay
D-int expense
C-cash

Question 10

note given to borrow entry

Answer 10

D-cash
C-notes pay

Question 11

note borrowed paid back entry

Answer 11

D-notes pay
D-int expense
C-cash

Question 12

when a note xtends over 2 periods

Answer 12

D-int enxpense
C-int pay

Question 13

contingent liability

Answer 13

potential obligation that depends on a future event arising from a past transaction

Question 14

when to record liability

Answer 14

when the future even tis proable and can be reasonabily estimated

Question 15

when to discloise in notes

Answer 15

when the future event is reasonablly probable (could occur)

Question 16

when “no disclosure”

Answer 16

the future event is unlikley

Question 17

potential legal claims

Answer 17

recorded in the accounts only if payment for damages is probable and the
amount can be reasonably estimated.

Question 18

debt garuntees

Answer 18

require disclosure in financial statement
notes if potential liabilities are reasonably possible

Question 19

Other Contingencies

Answer 19

environmental damages, possible tax assessments, insurance losses, and government
o investigations)—usually disclosed in as a contingent liability

Question 20

record interest accured

Answer 20

D-int exp
C-int pay

Question 21

recoridng payment of note at maturitu

Answer 21

D-notes pay
D-int pay
D-int exp
C-cash

Question 22

liabilities section of balance sheet

Answer 22

current liabilities
current potion of debt
long term
whatevers left note pay

Question 23

interest recognized matches

Answer 23

interest expense

Question 24

year end interest accrual matches

Answer 24

interst pay

Question 25

recoridng payment of note at maturitu (when only one interest)

Answer 25

D-notes pay
D-int exp
C-cash