Liabilities Week 1

Question 1

Define Accounts Payable

Answer 1

represents what the company owes to vendors or suppliers

Question 2

What are some current liabilities

Answer 2

Income Taxes Payable, Short term loans, compensation and benefits, deferred revenues

Question 3

Define Income taxes payable

Answer 3

Monies owed to government for work performed by employees

Question 4

Define Short term loan

Answer 4

Monies borrowed with the intention of repaying within a year

Question 5

Define Compensation and benefits

Answer 5

salaries and benefits owed to employees for work they have completed

Question 6

Define Deferred Revenues

Answer 6

goods and services paid for but not completed

Question 7

Define non current liabilities

Answer 7

Liabilities that have more than a year life span

Question 8

What are some non current liabilities

Answer 8

Notes payables, Deferred Income taxes, Bonds Payable, Long term loans

Question 9

Define Notes payable

Answer 9

Agreements with vendors or suppliers that you will make payments for a set time longer than a year

Question 10

Deferred Income Taxes

Answer 10

Represents the difference between amount of the depreciation expenses on a financial statement is vs the amount reported on a company’s income tax statement

Question 11

Define Bonds Payable

Answer 11

issued by a company which promises to pay back on principal at a set time

Question 12

examples of non current

Answer 12

2 Year loan, Mortgage, Car loan

Question 13

Liabilities have a normal ____side

Answer 13

credit side

Question 14

What is the definition of a liability

Answer 14

the claims against a company’s assets

Question 15

a company obligation that will come due within a year is ?

Answer 15

current liability

Question 16

a company’s obligation that will come due more than a year

Answer 16

non current liability

Question 17

the expected balance of a particular account is known as ?

Answer 17

the normal balance

Question 18

What financial statement is deferred revenue on and why

Answer 18

Balance sheet because it hasn’t been earned so could potentially be given back so it is a liability

Question 19

You should be careful to spend moneys from this account ?why?

Answer 19

Deferred revenue, because you could potentially have to give that money back

Question 20

Why is deferred revenue good

Answer 20

because it’s some times better to get financing from customers rather than a bank loan

Question 21

An account with a balance other than what is expected or normal may indicate a(n) __________

Answer 21

error

Question 22

Dale wants to take out a mortgage to purchase a commercial space to expand his business: “Tailor Swift - Quick Alterations and Embroidery Services”. He has found a property, prepared his business proposal, and is going to meet with the bank. He has been working out of his home for years and already has a good client base, lots of equipment, and inventory valued at $50,000 to get his business off the ground in a formal space.

If granted a $100,000 mortgage, how would the accounting equation look to keep his books balanced?

Answer 22

Liabilities 100k +, Assets 100k+, Equity 0

Question 23

Suzanne owns a clothing store in a small beach town called ‘Sunny Side Threads’. She wants to expand her brand’s influence by using a van she can hang clothes and accessories in for traveling to events along the coast during summer.

If Suzanne were to purchase a $45,000 van with a bank loan, paying $12,000 down, at 6.99% over 72 months, where would the loan itself go on the balance sheet?

Answer 23

Long term loan - Liabilities

Question 24

Tosin has a customer who has already paid him to come pressure wash their house next month. Tosin would record this payment as a _______?

Answer 24

Current Liabilities

Question 25

When setting up an account to document a line of credit in QuickBooks, you need to:

Answer 25

Set up two separate accounts, one for the principal and an expense account for interest

Question 26

Seymore Fish takes out vendor credit of $5500 with “Akon Aquatics Custom Tank Supplies” to replace his custom-made fish tanks for “Seymore’s Sea Store” where he sells pet fish and small sea creatures.

Seymore would credit his line of credit under _______ for $5,500 and debit his _____ for $_______?

Answer 26

Accounts payable and Fixed Asset- Fish Tank; $5,500

Question 27

In the same state, shoes, bananas, and a haircut would all be subject to the same sales tax rate. Ture of False

Answer 27

False, because different municipalities may have different tax codes

Question 28

Funds in the Sales Tax Payable account can be treated as if they were Sales Revenue. True or False

Answer 28

False, because sales tax payable is a liability

Question 29

Which feature of accounting software can provide information about how much sales tax is owed to each tax agency?

Answer 29

Sales tax liability report