99.The current ratio is
a.current assets plus current liabilities.
b.current assets minus current liabilities.
c.current assets divided by current liabilities.
d.current assets multiplied by current liabilities.
100.Monkee's Company has current assets of $45,000, current liabilities of $50,000, long-term assets of $90,000 and long-term liabilities of $40,000. Monkee's Company's working capital and its current ratio are:
a.$45,000 and .90:1.
b.$5,000 and 1.50:1.
c.$5,000 and .90:1.
d.($5,000) and .90:1.
101.Landfall Navigation began operations in 2017 and provides a one year warranty on the products it sells. They estimate that 20,000 of the 400,000 units sold in 2017 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 16,000 units presented for service in 2017 was $128,000. Landfall should report
a.warranty expense of $32,000 for 2017.
b.warranty expense of $160,000 for 2017.
c.warranty liability of $160,000 on December 31, 2017.
d.no warranty obligation on December 31, 2017, since this is only a contingent liability.
102.Autotether, Inc. sells 1,200 units of a product that has a one-year warranty on parts. The average cost of honoring one warranty contract is $60. During the year 60 contracts are honored at a cost of $3,600. It is estimated that 120 contracts will be honored in the following year. The adjusting entry at the end of the current year will include a
a.credit to Warranty Liability for $7,200.
b.credit to Warranty Liability for $10,800.
c.debit to Warranty Expense for $3,600.
d.debit to Warranty Expense for $10,800.
103.A contingent liability need only be disclosed in the financial statement notes when the likelihood of the contingency is
104.If a contingent liability is reasonably estimable and it is reasonably possible that the contingency will occur, the contingent liability
a.should be recorded in the accounts.
b.should be disclosed in the notes accompanying the financial statements.
c.should not be recorded or disclosed in the notes until the contingency actually happens.
d.must be paid for the amount estimated.
105.The accounting for warranty cost is based on the expense recognition principle, which requires that the estimated cost of honoring warranty contracts should be recognized as an expense
a.when the product is brought in for repairs.
b.in the period in which the product was sold.
c.at the end of the warranty period.
d.only if the repairs are expected to be made within one year.
106.If a liability is dependent on a future event, it is called a
107.Current maturities of long-term debt
a.require an adjusting entry.
b.are optionally reported on the balance sheet.
c.can be properly classified during balance sheet preparation, with no adjusting entry required.
d.are not considered to be current liabilities.
108.A contingency that is remote
a.should be disclosed in the financial statements.
b.must be accrued as a loss.
c.does not need to be disclosed.
d.is recorded as a contingent liability.