M5 - M1 - Payables and Accrued Liabilities

Question 1

___________ are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.

Answer 1

Liabilities

Question 2

Liabilities must be identified as _____ or ____for financial reporting purposes.

Answer 2

current or non-current

Question 3

Current liabilities are obligations with maturities within ____________, whichever is longer.

Answer 3

one year or the operating cycle

Question 4

Current liabilities are valued at their __________ or ______________

Answer 4

settlement values; net realizable values

Question 5

__________ are amounts owed for goods, raw materials, and supplies that are not evidenced by a promissory note.

Answer 5

Trade accounts payable

Question 6

Purchases of goods and services on credit are usually determinable as to ___________ and _________

Answer 6

amounts due and the due date

Question 7

Cash discounts associated with accounts payable can be anticipated and journalized. The purchase may be recorded ____ or _____.

Answer 7

gross or net

Question 8

_____________ are formal, written promises to pay on a certain date and arise from the purchase of goods, supplies, or services.

Answer 8

Trade notes payable

Question 9

Trade notes payable may include a _______ rate.

Answer 9

stated interest rate.

Question 10

Short-term and long-term debt instruments with a stated interest rate whose payment date does not coincide with the fiscal year-end will result in an _________ at year-end.

Answer 10

nterest payable balance

Question 11

The amount accrued should represent the__________ that has not been paid in cash as of the balance sheet date.

Answer 11

interest expense incurred

Question 12

Debt instruments may be set up such that __________________ are made during the life of the borrowing. In this case, the principal due within the next year (or operating cycle) will be classified as a ___________

Answer 12

periodic principal payments; the next year (or operating cycle) will be classified as a current liability.

Question 13

__________ relate to expenses incurred that have not been paid in cash at the financial statement date (such as wages, utilities, rent, etc.).

Answer 13

Accrued liabilities

Question 14

__________ may include property, sales, and income taxes due but not yet paid.

Answer 14

Taxes payable

Question 15

Unemployment taxes and the employer’s share of payroll taxes (e.g., Social Security and Medicare) should be accrued by the employer as an ___________..

Answer 15

expense.

Question 16

Payroll deductions for Social Security, Medicare, and income taxes are withheld from employees out of the gross pay of their paychecks. These deductions are the responsibility of the employee and are therefore not recorded as an _______, but credited to a ______________until remitted.

Answer 16

expense; payable account

Question 17

__________ are paid absences from employment that can relate to vacation, holidays, or sick pay

Answer 17

Compensated absences

Question 18

Liabilities related to these future absences are _______ in the year earned if certain conditions are met.

Answer 18

accrued

Question 19

A ______ must be recognized for the costs associated with an exit or disposal activity.

Answer 19

liability

Question 20

Exit or Disposal Activities - These costs include: involuntary employee termination benefits; costs to terminate a contract that is not a capital lease; and other costs associated with _______ activities, including costs to consolidate facilities or relocate employees.

Answer 20

exit or disposal activities

Question 21

An ___________ is a legal obligation associated with the retirement of a tangible, long-lived asset that results from the acquisition, construction, or development and/or normal operation of a long-lived asset, except for certain lease obligations (minimum lease payment and contingent rentals).

Answer 21

asset retirement obligation

Question 22

When an asset retirement obligation exists and qualifies for recognition, an entity records an _____ and a ________ on the balance sheet equal to the _______ of the asset retirement obligation

Answer 22

asset (ARC) and liability (ARO); fair value

Question 23

if a reasonable estimate of fair value can be made. Fair value is generally equal to the _____________.

Answer 23

present value of the future obligations.

Question 24

In subsequent periods after the initial measurement, the ARO liability is adjusted for ________ due to the passage of time, and _________ is recognized on the ARC asset.

Answer 24

accretion expense; depreciation expense