Accounting Expert Answers & Study Resources : Page 191

66) Refer to Table 11-3. The December 31, 2008, balance sheet would report: A) an interest payable of $100 B) an interest expense of $300 C) a note payable of $8,100 D) a note payable of $8,200 67) Refer to Table 11-3. The amount of interest expense recognized in 2009 would be: A) $100.00 B) $50.00 C) $200.00 D).

12) Suppose you borrow $2,000 for one year and at the end of the year you repay the $2,000 plus $110 of interest. If the expected inflation rate was 2.2% at the time you took out the loan, what was the real interest rate you paid? A) 2.2% B) 3.3% C) 5.5% D) 7.7% 13).

144) Answer the following questions briefly and concisely. a)  Why is it important for a company to separate the current portion of long-term debt from the long-term debt? b)  How would the underaccrual of warranty expense affect a company's financial statements? c)  What is the difference between a liability and a contingent liability? d) .

96) The total payroll expense of the employer is equal to: A) net pay plus employee withholdings B) gross pay plus employees' income tax C) net pay plus employer payroll taxes and fringe benefits D) gross pay plus employer payroll contributions and fringe benefits Table 11-6   Peter Tomach works for a manufacturing company. He earns $600.

11) In the United States, spending on Social Security, Medicare, and Medicaid was approximately ________ of GDP in 1962, and is expected to be approximately ________ of GDP in 2050. A) 12%; 50% B) 3%; 20% C) 40%; 5% D) 25%; 65% 12) According to a recent study, college students who graduate during an economic.

3.2   The Role of the Central Bank in the Financial System 1) By acting as a lender of last resort during a banking panic, a central bank allows commercial banks to A) encourage the public to borrow directly from the central bank, taking pressure of the banking system. B) satisfy customer withdrawal needs.

133) Faulkner Company engaged in the following transactions regarding unearned rent during 2009: Feb. 1Collected $6,000 from a tenant who was paying for a two-year lease. (Lease A) Mar. 1Collected $3,600 from a tenant who was paying for a one-year lease. (Lease B) Apr. 1Collected $7,200 from a tenant who was paying for.

3.1   Overview of the Financial System 1) One difference between stocks and bonds is that A) unlike bonds, stocks do not represent a claim on a share in the profits and assets of firms. B) stocks are financial securities and bonds are labor market securities. C) unlike bonds, stocks do not promise to repay.

1.2   How Economists Think About Macroeconomics 1) Economic models do all of the following except A) simplify some aspect of economic life. B) answer economic questions. C) make economic ideas explicit and concrete for use by decision makers. D) portray reality in all its minute details. 2) All of the following are part of an economic.

Article Summary   According to the Office for National Statistics, consumer price inflation in Great Britain rose to 4.4% in February 2011, its highest level in more than two years, and the broader measure known as retail price inflation rose to a level unseen since 1991. In February, a majority of the.

21) The relationship among interest rates on bonds that are otherwise similar but that have different maturities is known as the A) term structure of interest rates. B) risk structure of interest rates. C) term premium. D) Treasury bond coupon. 22) ________ Treasury bonds tend to have lower interest rates than ________ Treasury bonds. A) Lower.

34) What is the key macroeconomic issue of the short run and what is the key macroeconomic issue of the long run? 35) What is long-run economic growth and how is it measured? 36) Explain how the standard of living of the average person in an economy can increase? 37) Over the past.

11) An example of fixed investment spending is A) the purchase of a new apartment building by a property management company. B) the purchase of corporate bonds by Microsoft Corporation. C) the purchase of a new wood chipper by a landscape maintenance company. D) $4 million in unsold furniture at a home furnishings manufacturer. 12).

141) M & D Company has numerous employees who are paid on a monthly basis. Payroll information for August of the current year is given below. Employee compensation$135,000 Union dues 1,450 Charitable contributions875 Employee CPP contributions4,320 Employee EI contributions 2,336 Employee income tax withheld20,250 Prepare the journal entries to record the August payroll and the payroll benefits.

36) Current liabilities: A) are subtracted from long-term liabilities on the balance sheet B) must be of a known amount C) must be of an estimated amount D) are due within one year or one operating cycle, whichever is longer 37) Which of the following liabilities creates no expense on the part of the company? A).

16) Most economists believe there are four reasons the CPI overstates the true inflation rate. List and briefly explain these four reasons. 17) Suppose you borrow $8,000 for one year and at the end of the year you repay the $8,000 plus $600 of interest. The expected inflation rate was 3.5%.

3.3   Determining Interest Rates: The Market for Loanable Funds and the Market for Money 1) When determining interest rates, the loanable funds model is more useful when we are concerned with the determinants of the ________, and the money market model is more useful when we are concerned with the determinants.

2.2   Real GDP, Nominal GDP, and the GDP Deflator 1) Nominal GDP is the value of goods and services A) adjusted for inflation. B) adjusted for anticipated inflation. C) using base-year prices. D) using current -year prices. 2) Real GDP is the value of goods and services A) adjusted only for unanticipated inflation. B) adjusted only for anticipated.

127) Federated Express purchased equipment costing $75,000 on October 2, 2009, by paying 30% down and signing an 8%, 120-day note payable for the balance. Federated's year end is December 31. 1)   Prepare journal entries to: a) record the purchase of the equipment on October 2, 2009 b) record the accrual of interest.

139) The Brown Roof Company has three employees: an hourly employee, a salaried employee, and an employee who works for a flat fee plus commissions. Payroll information for the most recent week is as follows: Juan is paid $14 per hour with time and one-half for all hours over 40 per.

3.4   Calculating Interest Rates 1) When you borrow money from a bank, your bank charges you interest on the loan to compensate for all of the following except A) inflation. B) liquidity risk. C) the risk of default. D) the opportunity cost of other uses for the loaned money. 2) If you put $2,000 in a.

21) Explain the differences between the loanable funds market and the money market. 22) Suppose the federal government is successful in reducing the budget deficit, households decide to increase their saving, corporate taxes are reduced, and businesses expect to see an increase in future profits. Use the loanable funds model to.

21) The number of Mexican pesos required to buy the same number of goods and services in Mexico as one U.S. dollar buys in the United States is a description of the ________ exchange rate. A) actual B) real C) purchasing power parity D) chain-weighted 22) Suppose the current exchange rate between the Japanese.

6) Identify which of the following people would be considered either employed, unemployed, or not in the labor force: a.Alejandro just lost his job at an automobile assembly plant and is looking for work in another industry. b.Bonnie quit her job 6 months ago to take care of her newborn triplets. c.Cheyenne just.

4.1   The Aggregate Production Function 1) The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the firm's A) total factor productivity. B) marginal production level. C) technological ratio. D) production function. 2) The processes a firm uses to turn inputs into outputs of goods.

20) Describe how you might analyze and evaluate the following claim: College students who graduate during an economic recession accept jobs that, on average, pay 9% less than jobs accepted by students who graduate during economic expansions. 21) What is the difference between an endogenous variable and an exogenous variable? 22) Explain.

Match the following.   A) liability B) interest payable C) net pay D) employees' income tax payable E) Canada Pension Plan contributions F) current liability G) Workers' Compensation premiums H) contingent liability I) deductions J) gross pay K) Operating line of credit L) Employment Insurance contributions 115) A debt due to be paid within one year or one operating cycle, if the cycle is.

Article Summary   In response to a local newspaper report stating that foreign investment in the mining industry will be restricted, the Brazilian government announced that it has no immediate plans to limit this investment, and increase royalties in the industry. The Brazilian mining industry is dominated by domestic iron ore producer.

76) All of the following are estimated liabilities except: A) corporate income tax payable B) vacation pay payable C) employee income tax payable D) warranty payable 77) Reporting a current liability as long term: A) overstates working capital B) understates the current ratio C) has no effect on the acid-test ratio D) understates working capital 78) All of the following.

39) How are the labor force and the unemployment rate calculated? 40) What does the inflation rate measure, and what is deflation? 41) What is the Great Moderation? When did it begin and end? 42) What is monetary policy? 43) What is fiscal policy? 44) How do economists measure the "openness" of an economy? Explain.

11) If you pay $4,888 for a $5,000 face value one-year Treasury bill, what is the rate of interest you will receive? A) 1.02% B) 2.29% C) 4.46% D) 9.78% 12) If you pay $17,500 for a $20,000 face value one-year Treasury bill, what is the rate of interest you will receive? A) 8.75% B) 11.43% C) 12.5% D).

25) Explain how the circular flow diagram illustrates that the total value of spending on goods and services in an economy is equal to the total value of income in that economy. Table 2.2   20112012                                                  QuantityPriceQuantityPrice Oranges 30 $0.30   40 $0.50 Egg Rolls 60   1.10   75   1.30 Whistles 50   2.00   50   2.25 Table 2.2 gives quantities and prices.

Table 11-9   During 2009, Cougar Manufacturing launched a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 3% within 12 months following sale and 5% in the second 12 months following sale. Sales and actual warranty claims for the years ended December 31,.

11) By the 2000s, an important change in the mortgage market had occurred when ________ became significant participants in the secondary market for mortgages by buying, bundling, and reselling mortgages as mortgage-backed securities. A) commercial banks B) investment banks C) financial markets D) foreign governments 12) When the housing bubble began to burst in 2006,.

56) A company borrows $5,000 on November 1, 2008, giving a 10%, 180-day note payable. The adjusting entry on December 31, 2008, would include a: A) credit to interest payable for $82.19 B) credit to interest payable for $123.29 C) debit to interest expense for $246.58 D) credit to cash for $82.19 57) A company.

1.1   What Macroeconomics Is About 1) In the short run, macroeconomic analysis focuses on ________, while in the long run, the focus is on ________. A) fiscal policy; monetary policy B) short-run economic growth; population demographics C) unemployment; inflation D) the business cycle; long-run economic growth 2) ________ refers to alternating periods of economic expansion and.

Article Summary   College tuition prices have been on the rise for the past several years, but tuition is not the only price increase college students are facing.  A report issued by the College Board shows that increases in room and board prices at a typical public university have been outpacing inflation.

46) Referring to Table 11-1, what is the amount of interest expense recorded in 2009? A) $98.63 B) $193.97 C) $101.92 D) $120.00 47) Referring to Table 11-1, the entry on the maturity date would include a: A) credit to interest payable for $98.63 B) debit to interest expense for $98.63 C) credit to note payable for $10,295.89 D).

11) Refer to Table 2.3. Assume that 2009 is the base year. The GDP deflator for 2006 is A) 67.1. B) 84.5. C) 100.0. D) 118.3. 12) Refer to Table 2.3. Assume that 2009 is the base year. The GDP deflator for 2009 is A) 67.1. B) 84.5. C) 100.0. D) 118.3. 13) Refer to Table 2.3. Assume that 2009.

130) Very Bouys Inc. had cash sales of $650,000 during the month of July and collected the 8% sales tax on these sales required by the province in which Very Bouys operates. Very Bouys must remit the sales tax to the province. Required: Prepare all necessary journal entries to account for.

2.1   GDP: Measuring Total Production and Total Income 1) Gross domestic product is calculated as the sum of the A) total quantity of final goods and services produced in the economy during a period of time. B) total quantity of goods and services produced in the economy. C) total market value of goods and.

106) Referring to Table 11-7, the entry to record the employer's payroll costs includes a: A) debit to payroll tax payable for $14,484 B) credit to employee income tax payable for $10,200 C) debit to Canada Pension Plan expense for $3,366 D) credit to Canada Pension Plan expense for $3,366 107) All of the following.

136) Define a contingent liability. Discuss the CICA Handbook's guidelines on reporting contingencies. Give an example of a contingent liability and indicate how it should be reported. 137) For each of the following contingent situations, state the proper accounting treatment. a)  Glendale Company is involved in several lawsuits at the end of.

21) The actions that the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives refer to A) fiscal policy. B) monetary policy. C) quantitative analysis. D) Federal Reserve transparency. 22) The actions that the Federal Reserve takes to ________ to pursue macroeconomic policy objectives refer to monetary policy. A).

86) A contingent liability that is likely and can be reasonably estimated should be: A) disclosed in a note to the financial statements B) accrued with a journal entry C) either disclosed in a note or accrued with a journal entry D) ignored until the liability materializes 87) A contingent liability that is reasonably possible.

29) Zelda won the jackpot on a penny slot machine in Las Vegas and is given the following three options to receive her jackpot: Option 1: $100,000 to be received right away, with four additional payments of $100,000 to be received each year for the next four years. Option 2: $250,000 to.

Figure 3.2   11) Refer to Figure 3.2. A shift from D2 to D1 will result from which of the following? A) an increase in expected future profits B) an increase in net exports C) an increase in corporate taxes D) a decrease in tax credits for savings 12) Refer to Figure 3.2. A shift from D1.

143) The Big Hill Outdoor Shop Corp. is a retail store that uses the perpetual inventory system. A GST rate of 5 percent is applicable to all sales and purchases. Record the following transactions for The Big Hill Outdoor Shop. Explanations are not required. Jan. 4Purchased equipment for $20,000 plus GST, signing.

3.5   Appendix: More on the Term Structure of Interest Rates 1) Suppose you purchase a one-year bond that has a $450 coupon and a face value of $5,000, and immediately after you purchase the bond, new bonds are issued that are otherwise identical, except they have coupons of $375. If you.

Table 2.6   20102011 Nominal GDP $350 million $390 million Real GDP $325 million $375 million 29) Refer to Table 2.6. What is the inflation rate for 2011? Table 2.7   Gross domestic product $475,000 Transfer payments received by households        1,120 Retained earnings of corporations      21,400 Consumption of fixed capital      16,975 Personal tax payments            880 Interest on government bonds received by households            205 30) Refer to Table 2.7. Use.