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ACC 231 Exam 3 Practice Test
1. Which of the following is not a current liability?
a. Short term loans repayable within one year from the date of the balance sheet
b. Unearned revenue (contract will end in 7 months)
c. Accounts payable
d. Notes payable due in 6 months,
e. None of the above
2. Green Company has a note payable for $80,000, which requires 4 equal annual
payments of principal plus interest. In the first year of the note, Green will report this
liability as a:
a. current liability of $20,000 and a long-term liability of $60,000.
b. current liability of $80,000.
c. long-term liability of $80,000.
d. current liability of $60,000 and a long-term liability of $20,000.
3. Coopers Company wants to determine their accrued warranty payable for December 31,
2018. As of January 1, 2018, the accrued warranty payable was $5,500. Warranty
expense for the year was $8,000. Coopers Company paid $7,000 in warranties in 2018.
What is the amount of the warranty payable on December 31, 2018.
a. $4,500
b. $6,500
c. $9,500
d. $20,500
4. Company XYZ has a lawsuit against them with their lawyers indicating that the possibility
of being settled in favor of the plaintiff is remote. What should the company do?
a. Prepare a note within their financial statements
b. Make a disclosure in their financial statement footnote
c. Prepare a journal entry
d. Nothing
5. Stockholders equity consists of two parts. They are:
a. Retained earnings and common stock
b. Common stock, revenues, and expenses
c. Paid in capital and common stock
d. Retained earnings and paid in capital
6. Company ABC issues shares of no par common stock for a specified dollar amount.
What accounts are debited and credited?
a. Dr - Cash Cr - Common stock
b. Dr - Common stock Cr - Cash
c. Dr - Cash Cr - Paid-in Capital in Excess of Par
d. Dr - Cash Cr - Retained earnings