Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 12, Problem 2MC
A company regularly purchases materials from a manufacturer on credit. Payments for these purchases occur within the company’s operating cycle. They do not include interest and are established with an invoice outlining purchase details, credit terms, and shipping charges. Which current liability situation does this best describe?
A. sales tax payable
B. accounts payable
C. unearned revenue
D. income taxes payable
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A company regularly purchases materials from a manufacturer on credit. Payments for thesepurchases occur within the company’s operating cycle. They do not include interest and are established withan invoice outlining purchase details, credit terms, and shipping charges. Which current liability situation doesthis best describe?A. sales tax payableB. accounts payableC. unearned revenueD. income taxes payable
Before paying an invoice for goods received on account, the controller or treasurershould ensure thata. the company is paying for the goods it actually received.b. the company is paying for the goods it ordered.c. the company has not already paid this invoice.d. all of the above.
Which of the following situations may give rise to unearned revenue?
Select one:
a.
Providing trade credit to customers.
b.
Selling inventory.
c.
Providing manufacturer warranties.
d.
Selling magazine subscriptions.
Chapter 12 Solutions
Principles of Accounting Volume 1
Ch. 12 - Which of the following is not considered a current...Ch. 12 - A company regularly purchases materials from a...Ch. 12 - The following is selected financial data from...Ch. 12 - A ski company takes out a $400,000 loan from a...Ch. 12 - Nido Co. has a standing agreement with a supplier...Ch. 12 - A client pays cash in advance for a magazine...Ch. 12 - Lime Co. incurs a $4,000 note with equal principal...Ch. 12 - Which of the following best describes a contingent...Ch. 12 - Blake Department Store sells television sets with...Ch. 12 - What accounts are used to record a contingent...
Ch. 12 - Which of the following best describes a contingent...Ch. 12 - Which of the following accounts are used when a...Ch. 12 - Which of the following is not a characteristic of...Ch. 12 - Sunlight Growers borrows $250,000 from a bank at a...Ch. 12 - Marathon Peanuts converts a $130,000 account...Ch. 12 - An employee earns $8,000 in the first pay period....Ch. 12 - Which of the following is considered an employer...Ch. 12 - Employees at Rayon Enterprises earn one day a...Ch. 12 - An employee and employer cost-share health...Ch. 12 - Why is Accounts Payable classified as a current...Ch. 12 - On which financial statement are current...Ch. 12 - What is the difference between a noncurrent...Ch. 12 - How is the sales tax rate usually determined? Does...Ch. 12 - If Bergen Air Systems takes out a $100,000 loan,...Ch. 12 - What amount is payable to a state tax board if the...Ch. 12 - What specific accounts are recognized when a...Ch. 12 - What is a contingent liability?Ch. 12 - What are the two FASB required conditions for a...Ch. 12 - If a bankruptcy is deemed likely to occur and is...Ch. 12 - Name the four contingent liability treatments.Ch. 12 - A companys sales for January are $250,000. If the...Ch. 12 - What is a key difference between a short-term note...Ch. 12 - What business circumstance could bring about a...Ch. 12 - What business circumstance could produce a...Ch. 12 - Jain Enterprises honors a short-term note payable....Ch. 12 - What are examples of involuntary deductions...Ch. 12 - What are the tax rates for FICA Social Security...Ch. 12 - What are FUTA and SUTA taxes? Is there any...Ch. 12 - Use Figure 12.15 as a reference to answer the...Ch. 12 - Campus Flights takes out a bank loan in the amount...Ch. 12 - Consider the following accounts and determine if...Ch. 12 - Lamplight Plus sells lamps to consumers. The...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Elegant Electronics sells a cellular phone on...Ch. 12 - Homeland Plus specializes in home goods and...Ch. 12 - Bhakti Games is a chain of board game stores....Ch. 12 - Following is the unadjusted trial balance for Sun...Ch. 12 - Barkers Baked Goods purchases dog treats from a...Ch. 12 - Use information from EA10. Compute the interest...Ch. 12 - Scrimiger Paints wants to upgrade its machinery...Ch. 12 - Following are payroll deductions for Mars Co....Ch. 12 - Toren Inc. employs one person to run its solar...Ch. 12 - In EA14, you prepared the journal entries for the...Ch. 12 - An employee and employer cost-share pension plan...Ch. 12 - Everglades Consultants takes out a loan in the...Ch. 12 - Match each of the following accounts with the...Ch. 12 - Pianos Unlimited sells pianos to customers. The...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Monster Drinks sells twenty-four cases of...Ch. 12 - McMasters Inc. specializes in BBQ accessories. In...Ch. 12 - Following is the unadjusted trial balance for Pens...Ch. 12 - Airplanes Unlimited purchases airplane parts from...Ch. 12 - Use information from EB9. Compute the interest...Ch. 12 - Whole Leaves wants to upgrade their equipment, and...Ch. 12 - Reference Figure 12.15 and use the following...Ch. 12 - Marc Associates employs Janet Evanovich at its...Ch. 12 - In EB13, you prepared the journal entries for...Ch. 12 - An employee and employer cost-share 401(k) plan...Ch. 12 - Consider the following situations and determine...Ch. 12 - Stork Enterprises delivers care packages for...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Machine Corp. has several pending lawsuits against...Ch. 12 - Emperor Pool Services provides pool cleaning and...Ch. 12 - Serene Company purchases fountains for its...Ch. 12 - Mohammed LLC is a growing consulting firm. The...Ch. 12 - Lemur Corp. is going to pay three employees a...Ch. 12 - Record the journal entries for each of the...Ch. 12 - Consider the following situations and determine...Ch. 12 - Perfume Depot sells two different tiers of perfume...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Roundhouse Tools has several potential warranty...Ch. 12 - Shoe Hut sells custom, handmade shoes. It offers a...Ch. 12 - Air Compressors Inc. purchases compressor parts...Ch. 12 - Pickles R Us is a pickle farm located in the...Ch. 12 - Use Figure 12.15 to complete the following...Ch. 12 - Use the information from PB10 to complete this...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Consider each of the following independent situations. Should a company report the goods in its inventory? (a) Goods purchased by the company with shipping terms FOB shipping point that are in transit at the end of the year (b) Goods received by the company on consignment (c) An estimate of the amount of goods sold by the company that it expects the buyer to return (d) Goods required to be purchased by the company under an unconditional purchase obligationarrow_forwardWhat accounts are used to recognize a retailers purchase from a manufacturer on credit? A. accounts receivable, merchandise inventory B. accounts payable, merchandise inventory C. accounts payable, cash D. sales, accounts receivablearrow_forwardIndicate how each of the following should be classified on the company’s statement of financial position as of December 31, 2020 Claims from customers for merchandise sold Claims from employees representing cash advances Expense receipts for advances made for freight charges for the account of the supplier Claims from employees representing selling price of goods sold under normal credit terms Customers accounts with credit balances resulting from sales returns subsequent to full collection of account Claims against consignees for goods shipped to the latter, goods are still unsold at the reporting date Claims against consignees for goods shipped to the latter and already sold at Dec 31. Receivables arising from subscription to the company’s share capital Receivable arising from sale of equipment Deposit on purchase of undelivered merchandise Creditors account with debit balances resulting from overpayment Dishonored customers note Income tax refunds approved by BIR Assigned…arrow_forward
- Which of the following groupings of accounts includes only accounts that carry a normal credit balance? a.Customer Refunds Payable, Estimated Returns Inventory, and Sales b.Sales Tax Payable, Cost of Goods Sold, and Sales c.Inventory, Delivery Expense, and Sales d.Sales Tax Payable, Customer Refunds Payable, and Salearrow_forwardIn the accounting books of a company, the account "Purchases of goods" is recorded and accordingly it is used until the end of the year and the drawing up of its financial statements.a) Explain the meaning of the term, quoting a transaction with the relevant accounting entry appearing in the books of the company in question.b) Explain how the 'Purchases of Goods' account affects 'Cost of goods sold' and 'Result for the period'.arrow_forwardWhat does the phrase "Revenue is recognized at the point of sale" mean? (Assume the company reports using ASPE.) a.Revenue is recorded in the accounting records when the goods are sold to a customer and reported on the statement of earnings when the cash payment is received from the customer. b.Revenue is recorded in the accounting records and reported on the statement of earnings when the cash is received from the customer. c.Revenue is recorded in the accounting records when the cash is received from a customer and reported on the statement of earnings when sold to the customer. d.Revenue is recorded in the accounting records and reported on the statement of earnings when goods are sold and delivered to a customer.arrow_forward
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- Accounts receivable are best described as a. Liabilities of the company that represent the amount owed to suppliers. b. Amounts that have previously been received from customers. c. Assets of the company representing the amount owed by customers. d. Amounts that have previously been paid to suppliers.arrow_forwardWhich of the following accounts is used in merchandising but not in service type of business? a. allowance for bad debts b. purchase discounts c. depreciation expense d. sales returns and allowancesarrow_forwardRecording sales tax Consider the following transactions of Sapphire Software: Journalize the transactions for the company Ignore cost of goods sold.arrow_forward
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