Which of the following statements is false? Multiple Choice O Prepaid insurance is a liability reported on the balance sheet. Prepaid insurance represents a future economic benefit. Prepaid insurance indicates that a company has already paid cash for insurance coverage that protects the company for some future time period. Prepaid insurance is a deferred expense.

Which of the following statements is false? Multiple Choice O Prepaid insurance is a liability reported on the balance sheet. Prepaid insurance represents a future economic benefit. Prepaid insurance indicates that a company has already paid cash for insurance coverage that protects the company for some future time period. Prepaid insurance is a deferred expense.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 3MC: When a company receives a deposit from a customer to protect itself against nonpayment for future...

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The practice of recording advance payments from customers as a liability is an example of applying the O Going concern assumption. O Monetary unit assumption. O Historical cost principle. Revenue recognition principle.
When should a company report the cost of an insurancepolicy as an expense?a. When the company first signs the policy.b. When the company pays for the policy.c. When the company receives the benefits from thepolicy over its period of coverage.d. When the company receives payments from the insurance company for its insurance claims.
When a company receives a deposit from a customer to protect itself against nonpayment for future services, the deposit should be classified by the company as: a. revenue b. a liability c. part of the allowance for doubtful accounts d. a deferred credit deducted from accounts receivable
Which of the following situations does not base an accounting measure on a present value? Prepaid insurance , leases, pensions or sinking funds
Which of the following is an arrangement by which one party promises to pay a sum of money to policyholder as protection against an adverse or unfavorable occurrence of event? a. Short Term Loans b. Fixed Deposit c. Insurance d. Investment
Which is a valid statement regarding recognition of liabilities? a. A non-interest bearing note is initially recognized at face value. b. A provision should not be recognized for future operating losses. c. For accumulating compensated absences, an entity should recognize the expense and related liability during the period the absences are incurred by the employees. d. The estimated future costs of supplying awards for customer loyalty program shall be recognized as an expense in the period the award credits are availed of by customers.
Estimated liabilities are disclosed in financial statements by: A. footnote to the financial statements. B. showing the amount among the liabilities but not extending to the liability total. C. an appropriation of retained earnings. D. appropriately classifying them as regular liabilities in the balance sheet. An item that is not a contingent liability is: A. premium offer to customers for labels or box tops. B. accommodation endorsement on customer note. C. additional compensation that may be payable on a dispute now being arbitrated. D. note receivable discounted. A loss contingency that should be accrued is: A. note receivable discounted. B. pending lawsuit C. tax in dispute D. estimated claim under a service warranty on new products sold.
In terms of Business interruption insurance, the gross profit sum insured can be calculated on the following basis: 1 Net profit less standing charges. 2 Turnover plus closing stock, minus opening stock. 3 Net profit plus standing charges. 4 Turnover plus standing charges.
An item that is not a contingent liability is: A. premium offer to customers for labels or box tops. B. accommodation endorsement on customer note. C. additional compensation that may be payable on a dispute now being arbitrated. D. note receivable discounted. A loss contingency that should be accrued is: A. note receivable discounted. B. pending lawsuit C. tax in dispute D. estimated claim under a service warranty on new products sold.
Which of the following does not relate to credit risks? a. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan b. It refers to the risk that a lender may not receive the owed principal and interest c. Credit risk also describes the risk that an insurance company will be able to pay a claim. d. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations e. Credit risk describes the risk that a bond issuer may fail to make payment when requested
Which of the following is a characteristic of a current liability? A. It is an avoidable obligation. B. It occurs because of a future transaction or event. C. It cannot be settled with services. D. It creates a present obligation for future payment of cash or services.
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.