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Accounting Volume 2 Canadian 9th Edition Horngren - Test Bank
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Accounting, Vol. 2, 9e Cdn. Ed. (Horngren) Chapter 11 Current Liabilities and Payroll Objective 11-1 1) Accrued interest on a note payable should be credited to interest payable. Answer: TRUE Diff: 1 Type: TF Learning Outcome: A-12 Define and record current and contingent liabiliti...

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  • August 19, 2023
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,Accounting, Vol. 2, 9e Cdn. Ed. (Horngren)
Chapter 11 Current Liabilities and Payroll

Objective 11-1

1) Accrued interest on a note payable should be credited to interest payable.
Answer: TRUE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

2) Interest payable is a contra liability account and is deducted from the note payable on the balance
sheet.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

3) A $45,000, 10%, 90-day note payable comes to maturity. The amount to be paid at maturity including
interest is $43,890.41.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Application
Objective: 11-1 Account for current liabilities of known amount

4) An unearned revenue arises when a company receives cash from its customers in advance of earning
the revenue.
Answer: TRUE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

5) Current portion of long-term debt refers to the amount of principle on a note payable that must be paid
within a year.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount




1
© 2014 Pearson Canada Inc.

,6) The entry to record unearned revenue received in advance includes a debit to unearned revenue and a
credit to cash.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

7) Sales tax payable is recorded as a debit when recording a sale of merchandise.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

8) The failure to record an accrued liability causes a company to overstate its net income.
Answer: TRUE
Diff: 3 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Comprehension
Objective: 11-1 Account for current liabilities of known amount

9) The only way to reduce a current liability is to pay out cash.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Comprehension
Objective: 11-1 Account for current liabilities of known amount

10) Operating lines of credit are popular because they do not carry any interest charges.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

11) Interest must be accrued on all current notes payable. For long-term notes the interest is accrued at the
maturity of the note.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

12) Notes payable normally require the borrower to pay interest.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount




2
© 2014 Pearson Canada Inc.

, 13) A $15,000, 8%, 9-month note payable requires an interest payment of $900 at maturity, if no interest
was previously paid.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Application
Objective: 11-1 Account for current liabilities of known amount

14) The rate of provincial sales taxes is the same in every province.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

15) The Federal Government collects all the PST and GST for the country and then passes on the
collection of the PST to the individual provincial governments.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

16) Most lines of credit are payable on demand.
Answer: TRUE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

17) The province of Alberta has the lowest PST rate in Canada of 3%.
Answer: FALSE
Diff: 2 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

18) The methods of recording GST and HST are similar.
Answer: TRUE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount

19) In some provinces individual consumers must pay both HST and PST.
Answer: FALSE
Diff: 1 Type: TF
Learning Outcome: A-12 Define and record current and contingent liabilities
Skill: Knowledge
Objective: 11-1 Account for current liabilities of known amount




3
© 2014 Pearson Canada Inc.

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