Question: Obligations to be paid within one year or the company’s operating cycle, whichever is longer, are:

Answer: current liabilities.

Question: Which of the following do not apply to unearned revenues?

Answer: Amounts to be received in the future from customers for delivery of products or services in the current period

Question: A short-term note payable:

Answer: is a written promise to pay a specified amount on a definite future date within one year or the company’s operating cycle, whichever is longer.

Question: The employer should record deductions from employee pay as:

Answer: current liabilities.

Question: The amount of federal income taxes withheld from an employee’s paycheck is determined by:

Answer: current earnings for the pay period and number of withholding allowances the employee claims.

Question: Debt guarantees are:

Answer: considered to be contingent liabilities.

Question: Obligations not expected to be paid within the longer of one year or the company’s operating cycle are reported as:

Answer: long-term liabilities.

Question: When a company is obligated for sales taxes payable, it is reported as a(n):

Answer: current liability.

Question: Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Answer: False

Question: A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

Answer: recognize warranty expense and liability in the year of the sale.