Chap 13 - Current liab and contin

Question 1

Current liabilities are…

Answer 1

provided by owners or borrowed.

Question 2

3 characteristics of liabilities?

Answer 2

1) probable future sacrifices of economic benefits; 2) present obligations to other entities; and 3) result from past transactions or events.

Question 3

Current liabilities have 3 things:

Answer 3

1) payable within one year of B/S date, or operating cycle, whichever is longer; 2) require current assets; and 3) recorded at present values.

Question 4

Trade notes payable

Answer 4

recognized by a written promissory note.

Question 5

Credit lines

Answer 5

amts withdrawn when needed.

Question 6

Interest

Answer 6

amt for using lenders money

Question 7

Interest rate calc

Answer 7

face amt x annual rate x time to maturity

Question 8

Noninterest bearing note

Answer 8

interest deducted from face amt

Question 9

% rate =

Answer 9

full interest amt/amt borrowed

Question 10

Secured loans

Answer 10

specific asset pledged or security of loan

Question 11

secured loans are secured with what?

Answer 11

inventory or accts receivable

Question 12

factoring receivables

Answer 12

receivables sold outright to a finance co

Question 13

commercial paper

Answer 13

temporary financing, purchased by other companys as a short term investment

Question 14

Commercial paper interest

Answer 14

discounted at issuance

Question 15

commercial paper SCF

Answer 15

financing for borrowings and repayment, most other accts are operating

Question 16

Accrued liabilities

Answer 16

expenses already incurred but not yet paid

Question 17

AL at year end need?

Answer 17

adjusting entries

Question 18

accrued interest payable

Answer 18

arises with notes payable

Question 19

Salaries commissions and bonuses

Answer 19

provided services but paid after financial statement date

Question 20

salaries commissions and bonuses needed at year end

Answer 20

adjusting entries

Question 21

vacations sick days and other paid future absences

Answer 21

conditions for accrual of paid future absences

Question 22

VSDA condition 1

Answer 22

the obligation is attributable to employees services already performed

Question 23

VSDA condition 2

Answer 23

the paid absence can be taken in a later year - the benefit vests (will be compensated even if employment terminated) or the benefit can be accumulated over time.

Question 24

VSDA condition 3

Answer 24

payment is probable

Question 25

VSDA condition 4

Answer 25

the amt can be reasonably estimated

Question 26

VSDA accrued at?

Answer 26

existing wage rate

Question 27

annual bonus

Answer 27

accrued at year end as a liability

Question 28

contingencies

Answer 28

existing uncertain situation involving potential loss depending if a future event occurs

Question 29

Loss contingency conditions

Answer 29

likelihood of event happening; what can be determined about loss amt; and only accted for when event occurs before FS date

Question 30

Expected cash flow approach for warranties

Answer 30

(warranty costs x probability) x present value

Question 31

JE for expected cash flow approach of warranties

Answer 31

DR warranty expense; CR warranty liablities (as adj entry for all years)

Question 32

extended warranty obligations

Answer 32

recognized when performance obligation satisfied. deferred revenue liability at sale

Question 33

Gain contingency

Answer 33

recognized when realized and disclosed only if material