Pretest Chapter 13

1
Pretest Chapter 13

• This presentation will probably involve audience
  discussion, which will create action items. Use
  PowerPoint to keep track of these action items
  during your presentation
• In Slide Show, click on the right mouse button
• Select Meeting Minder
• Select the Action Items tab
• Type in action items as they come up
• Click OK to dismiss this box
• This will automatically create an Action Item
  slide at the end of your presentation with your
  points entered.

• 1. Stock dividends distributable should be
  classified on the
• a. income statement as an expense.
• b. balance sheet as an asset.
• c. balance sheet as a liability.
• d. balance sheet as an item of stockholders'
  equity.
• 2. A contingent liability
• a. definitely exists as a liability but its
  amount and due date are
• indeterminable.
• b. is accrued even though not reasonably
  estimated.
• c. is not disclosed in the financial
  statements.
• d. is the result of a loss contingency.
• 3. Which of the following is the proper
  way to report a gain contingency?
• a. As an accrued amount.
• b. As deferred revenue.
• c. As an account receivable with additional
  disclosure explaining the
• nature of the contingency.
• d. As a disclosure only.

2
Pretest Chapter 13

• This presentation will probably involve audience
  discussion, which will create action items. Use
  PowerPoint to keep track of these action items
  during your presentation
• In Slide Show, click on the right mouse button
• Select Meeting Minder
• Select the Action Items tab
• Type in action items as they come up
• Click OK to dismiss this box
• This will automatically create an Action Item
  slide at the end of your presentation with your
  points entered.

• 4. Which of the following is a current liability?
• a. A long-term debt maturing currently, which
  is to be paid with cash
• in a sinking fund
• b. A long-term debt maturing currently, which is
  to be retired with
• proceeds from a new debt issue
• c. A long-term debt maturing currently, which
  is to be converted into
• common stock
• d. None of these
• 5. On September 1, 2004, Gaston Co. issued
  a note payable to National Bank in the amount of
  1,500,000, bearing interest at 12, and payable
  in three equal annual principal payments of
  500,000. On this date, the bank's prime rate was
  11. The first payment for interest and principal
  was made on September 1, 2005. At December 31,
  2005, Gaston should record accrued interest
  payable of
• a. 60,000.
• b. 55,000.
• c. 40,000.
• d. 36,667.