MGMT 200 Final Exam 156 Questions and Answers 2024
,MGMT 200 Final Exam 156 Questions and Answers 2024
Woodcrest, Inc. borrowed $50,000 from a local bank and signed a promissory note.
What entry should Woodcrest record?
A. Debit Cash, $50,000; Credit Notes Receivable, $50,000.
B. Debit Notes Receivable, $50,000; Credit Cash, $50,000.
C. Debit Cash, $50,000; Credit Notes Payable, $50,000.
D. Debit Notes Payable, $50,000; Credit Cash, $50,000. - ANSWER-C. Debit Cash,
$50,000; Credit Notes Payable, $50,000.
We record interest expense in the period in which we pay it, rather than in the period we
incur it
A. True
B. False - ANSWER-B. False
On November 1, 2018, Knomark, Inc. signed a $100,000, 6%, six‐month note payable
with the amount borrowed plus accrued interest due six months later on May 1, 2019.
Knomark should report interest payable at December 31, 2018, in the amount of
A. $0.
B. $1,000
C. $2,000
D. $3,000 - ANSWER-B. $1,000
On November 1, 2018, Boiler Bakery signed a $200,000,
6%, six‐month note payable with the amount borrowed plus accrued interest due six
months later on May 1, 2019. Boiler Bakery records the appropriate adjusting entry for
the note on December 31, 2018. What amount of cash will be needed to pay back the
note payable plus any accrued interest on May 1, 2019?
A. $200,000.
B. $202,000
C. $204,000
D. $206,000 - ANSWER-D. $206,000
A contingency is best described as a(n)
a. currentliability.
b. probable liability.
c. potential liability.
d. estimatedliability. - ANSWER-c. potential liability.
If management can estimate the amount of loss that will occur due to litigation against
the company, and the likelihood of the loss is reasonably possible, a contingent liability
should be
A. Disclosed, but not reported as a liability
B. Disclosed and reported as a liability
C. Neither disclosed nor reported as a liability
, MGMT 200 Final Exam 156 Questions and Answers 2024
D. Reported as a liability, but not disclosed - ANSWER-A. Disclosed, but not reported
as a liability
Reeves Co. filed suit against Higgins, Inc., seeking damages for copyright violations.
Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an
estimated amount in the range of $100,000 to $200,000, with all amounts in the range
considered equally likely. How should Higgins report this litigation?
A. As a liability for $100,000 with disclosure of the range
B. As a liability for $150,000 with disclosure of the range
C. As a liability for $200,000 with disclosure of the range
D. As a disclosure only. No liability is reported - ANSWER-A. As a liability for $100,000
with disclosure of the range
Away Travel filed suit against West Coast Travel seeking damages for copyright
violations. West Coast Travel's legal counsel believes it is reasonably possible that
West Coast Travel will settle the lawsuit for an estimated amount in the range of
$100,000 to $200,000, with all amounts in the range considered equally likely. How
should West Coast Travel report this litigation?
A. As a liability for $100,000 with disclosure of the range
B. As a liability for $150,000 with disclosure of the range
C. As a liability for $200,000 with disclosure of the range
D. As a disclosure only. No liability is reported - ANSWER-D. As a disclosure only. No
liability is reported
If management can estimate the amount of loss that will occur due to litigation against
the company, and the likelihood of the loss is probable, a contingent liability should be
A. Disclosed, but not reported as a liability
B. Disclosed and reported as a liability
C. Neither disclosed nor reported as a liability
D. Reported as a liability, but not disclosed - ANSWER-B. Disclosed and reported as a
liability
Footnote disclosure is required for material potential losses when the loss is at least
reasonably possible:
A. Only if the amount is known.
B. Only if the amount is known or reasonably estimable.
C. Unless the amount is not reasonably estimable.
D. Even if the amount is not reasonably estimable. - ANSWER-D. Even if the amount is
not reasonably estimable.
Ford estimates engine warranty expense in the year a car is sold. This best follows
which of the following accounting principles?
A. historical cost
B. full disclosure
C. consistency
D. matching - ANSWER-D. matching
