Exam (elaborations)
Accounting Exam 3 Questions and Answers
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- Accounting
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- Accounting
Accounting Exam 3 Questions and Answers
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Accounting Exam 3 Questions andAnswers
Current (short-term) Assets - Answer-Assets that will be converted to cash or consumed
within one year or an operating cycle which ever is longer
Current Assets - Answer-(short-term)
cash, marketable securities, accounts recorded, short-term notes recorded, interest
received, inventory, supplies, prepaid items
Current (short-term) Liabilities - Answer-obligation due within one year or an operating
cycle, which ever is longer
Current Liabilities - Answer-(short-term)
Accounts payable, short-term notes payable, wages payable, taxes payable, interest
payable
Contingent liability - Answer-a potential obligation, the amount of which depends on the
outcome of future events, a potential obligation arising from a past event. ex:(pending
lawsuit)
the entry to record cost of goods sold for this sale is intentionally omitted.
Contingent Liabilities - Answer-Probable and estimable -> recognize in the financial
statements (FS).
reasonably possible/probable, but not estimable -> disclose in the footnotes to FS.
Remote-> do nothing.
Bond - Answer-a company's obligation to pay interest and to repay the principle. Long
term notes (20 years) longer terms to maturity allow companies to implement long-term
strategic plans w/o having to worry about frequency refinancing arrangements.
Preferred shareholders - Answer-holders of preferred stock receive certain privileges
relative to holders of common stock. No voting rights and the amount of their dividends
is usually limited.
Preference as to assets - Answer-preferred stock often has a liquidation value.
preferred stockholders must be paid the liquidation value before any assets are
distributed to common stock holders. (still fall behind creditor claims)
preference as to dividends - Answer-shareholders are frequently guaranteed the right to
receive dividends before common stockholders.
preferred stock - Answer-4%, $10 par, 10,000 shares
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