WGU D196 Objective Assessment Prep (Latest 2024/
2025 Update) Principles of Financial and Managerial
Accounting- Questions and Verified Answers| 100%
Correct| Grade A
Current Liability - ANSWERA debt that a company expects to pay from existing
current assets or through the creation of other current liabilities, and within one
year or the operating cycle, whichever is longer
current liabilities include - ANSWERnotes payable, accounts payable, unearned
revenues, and accrued liabilities, such as: taxes payable, salaries and wages payable,
and interest payable
Notes Payable - ANSWER-written promissory note
-frequently issued to meet short term financing needs
-usually require the borrower to pay interest
Notes Payable formula for computing interest - ANSWERface value of note X annual
interest rate X time is terms of one year = interest
sales taxes payable - ANSWER-expressed as stated percentage of the sales price
-retailer: collects tax from customer at time of sale, enters tax separately in cash
register or includes in total receipts, and remits the collection (usually monthly) to
the state department of revenue
unearned revenue - ANSWERadvanced payments received before a company:
- delivers goods
-provides services
current maturities of long term debt - ANSWER-portion of long term debt that comes
due in current year
-no adjusting entry required
payroll and payroll taxes payable - ANSWER-companies are required to withhold
amounts from employee wages to pay various governmental authorities
-companies withhold from employee paychecks amounts that must be paid to other
parties
-liability incurred
payroll taxes - ANSWER-FICA (social security and medicare) taxes
- state and federal unemployment taxes
payroll deductions - ANSWER-insurance, pensions, union duties
-FICA taxes
-Federal income tax
, -State and city income tax
-charity
DOES NOT INCLUDE Federal Income Taxes
Net Pay equals - ANSWERgross pay minus payroll deduction
Long-Term liabilities - ANSWERobligation that are expected to be paid more than
one year in the future
Bonds - ANSWERA form of interest-bearing notes payable issued by corporations,
universities, and governmental entities.
: sold in small denominations (usually $1000 or multiples of $1000)
Bonds - ANSWER-attract many investors
-corporations issuing bonds is borrowing money
-person who buys the bond (bond holder) is lending money
Bonds Issuing Procedure: Authorization - ANSWER-state laws grant corporations the
power to issue bonds
-board of directs and stockholders usually must approve bond issues
board of directors must stipulate: - ANSWERnumber of bonds to be authorized, total
face value, and contractual interest rate
bond terms set forth in legal document known as a - ANSWERbond indenture
bond certificate - ANSWERtypically a $1000 face value
Bonds Issuing Procedure: Terms - ANSWER-represents a promise to pay a sum of
money at a designated maturity date
- periodic interest at a contractual (stated) rate on the maturity amount (face value)
Issuing procedure: Terms - ANSWER-interest payments usually made semiannually
-issued to obtain large amounts of long term capital
investment company - ANSWERsells the bonds for the issuing company
Bond trading - ANSWERBondholders can sell their bonds on national exchanges.
Bond prices are quoted as a percentage of the face value.
A quoted price of 97 means 97% of face value.
Current market price (present value) is a function of three factors - ANSWER1. dollar
amounts to be received
2. length of time until the amounts are received
3. market interest rate
market interest rate - ANSWERrate investors demand for loaning funds
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