Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 10, Problem 10.5CP
a)
To determine
- Remote
- Reasonably possible
- Probable
To state: the major business units of Incorporation A.
b)
To determine
To explain: the reason for Incorporation A requiring so many pages of contingency liabilities.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Visit the website of the US Securities and Exchange Commission (SEC) https://www.sec.gov/edgar/searchedgar/companysearch.html Search for the latest Form 10-K for a company you would like to analyze. Submit a short memo that
A. Includes the name of the company you have chosen.B. Review the company’s end-of-period Balance Sheet to determine the following:
Total assets
Total liabilities
Total equity
C. Compare beginning and ending Assets totals and discuss the amount of change.D. Compare beginning and ending Liabilities totals and discuss the amount of change.E. Compare beginning and ending Equity totals and discuss the amount of change.
Please provide a link to the company’s Form 10-K to allow accurate verification of your answers.
Match the following terms or phrases in (a–g) with the explanations in 1–8. Terms or phrases may be used more than once.
Question 11 options:
Current assets/Current liabilities
Probable likelihood and estimable liability
Measures the “instant” debt-paying ability of a company
Current assets – Current liabilities
(Cash + Temporary investments + Accounts receivable)/Current liabilities
Cash + Temporary investments + Accounts receivable
Probable likelihood of a liability but cannot be estimated
Remote contingent liability
Reasonably possible likelihood of a liability
1.
Current ratio
2.
Working capital
3.
Quick assets
4.
Quick ratio
5.
Record an accrual and disclose in the notes to the financial statements
6.
Disclose only in notes to financial statements
7.
No disclosure needed in notes to financial statements
Accounting for liabilities involves recording and managing obligations a company owes to external parties. Liabilities are classified based on their nature and timing of settlement. Common types include:
Current Liabilities: Debts or obligations expected to be settled within one year or the operating cycle, whichever is longer. Examples include accounts payable, accrued expenses, and short-term loans.
Long-Term Liabilities: Obligations not due within the next operating cycle or one year. Examples include long-term loans, bonds payable, and lease obligations.
Contingent Liabilities: Potential obligations that depend on a future event, such as lawsuits or warranties. They are disclosed in the footnotes of financial statements unless the likelihood of payment is remote.
Deferred Revenue: Payments received in advance for goods or services to be provided in the future. They are recorded as liabilities until the revenue recognition criteria are met.
Accrued Liabilities: Expenses…
Chapter 10 Solutions
Financial & Managerial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 8DQCh. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ
Ch. 10 - Proceeds from notes payable On October 12,...Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2APECh. 10 - Prob. 10.2BPECh. 10 - Prob. 10.3APECh. 10 - Prob. 10.3BPECh. 10 - Prob. 10.4APECh. 10 - Prob. 10.4BPECh. 10 - Prob. 10.5APECh. 10 - Prob. 10.5BPECh. 10 - Prob. 10.6APECh. 10 - Prob. 10.6BPECh. 10 - Prob. 10.7APECh. 10 - Prob. 10.7BPECh. 10 - Quick ratio Nabors Company reported the following...Ch. 10 - Quick ratio Adieu Company reported the following...Ch. 10 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 10 - Entries for discounting notes payable Griffin...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Prob. 10.6EXCh. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 32 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Prob. 10.10EXCh. 10 - Payroll tax entries According to a summary of the...Ch. 10 - Prob. 10.12EXCh. 10 - Prob. 10.13EXCh. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Pension plan entries Yuri Co. operates a chain of...Ch. 10 - Prob. 10.18EXCh. 10 - Accrued product warranty Lowe Manufacturing Co....Ch. 10 - Prob. 10.20EXCh. 10 - Prob. 10.21EXCh. 10 - Quick ratio Gmeiner Co. had the following current...Ch. 10 - Prob. 10.23EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Payroll register The following data for Throwback...Ch. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Prob. 10.3BPRCh. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 1CPPCh. 10 - Ethics and professional conduct in business Tonya...Ch. 10 - Prob. 10.2CPCh. 10 - Prob. 10.3CPCh. 10 - Prob. 10.5CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Analysis of Financial StatementsThere was a bit of concern about one of Big Rock’s newer entities – Big Rock PavingCompany. Management wants you to review the two financial statements below and giveyour analysis of the company’s performance.Big Rock Paving CompanyAssetsLiabilitiesCurrent Assets: Current Liabilities:Cash 500,000 Accounts Payable 700,000Accounts Receivable 300,000 Notes Payable 500,000Inventory 800,000Total Current Assets 1,300,000 Total Current Liabilities 1,200,000Fixed Assets: Owners’ Equity:Property, Plant & Equipment 2,200,000 Common Stock ($1 Par) 600,000Less: Accumulated Depreciation 600,000 Capital Surplus 100,000Net Fixed Assets 1,600,000 Retained Earnings 100,000Total Assets 2,900,000 Total Owners’ Equity 800,000Total Liabilities and Owners’Equity2,900,000Big Rock Paving CompanyIncome Statement for Year Ending December 31, 2021Sales 3,400,000Less: Cost of Goods Sold 2,700,000Less: Administrative Expenses 700,000Less Depreciation 682,000Earnings Before…arrow_forwardMost companies pay current liabilities Select one: a. out of current assets. b. by issuing interest-bearing notes payable. C. by issuing stock. d. by creating long-term liabilities.arrow_forwardWhich of the following items we appear as current liabilities in a company’s statement of financial position? a. Loan due for repayment within one year, trade payables, drawings b. Loan due for repayment within one year, trade payables, accruals c. Loan due for repayment within one year, trade payables and trade receivables d. Loan due for repayment within one year, trade payables and capitalarrow_forward
- Current liabilities a. May include contingent liabilities.b. Include obligations payable within one year or one operating cycle, whichever is shorter.c. Can be satisfied only with the payment of cash.d. Are preferred by most companies over long-term liabilities.arrow_forwardLong-term solvency refers to a company’s ability to pay its long-term obligations. Financing ratios provideinvestors and creditors with an indication of this element of risk.Required:1. Calculate the debt to equity ratio for AGF for 2018. The average ratio for the stocks listed on the New YorkStock Exchange in a comparable time period was 1.0. What information does your calculation provide aninvestor?2. Is AGF experiencing favorable or unfavorable financial leverage?3. Calculate AGF’s times interest earned ratio for 2018. The coverage for the stocks listed on the New YorkStock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF’s risk?arrow_forwardThe database summarizes financial information for 32 companies and their perceived risk of default. Convert these data into an Excel table. Use table-based calculations to find the average debt and average equity for companies with a risk of default, and also for those without a risk of default. Does there appear to be a difference between companies with and without a risk of default? Company Category Credit Score Debt Equity Default Assessment1 Service 604 10,644,614 3,975,798 Yes2 Manufacturing 714 4,787,980 2,120,721 No3 Manufacturing 732 179,433 1,785,756 No4 Manufacturing 792 8,464,689 11,939,364 No5 Service 623 3,273,638 779,720 Yes6 Manufacturing 702 13,367,369 4,392,888 Yes7 Service 764 4,117,031 6,145,790 No8 Manufacturing 690 7,356,986 5,853,539 No9 Service 802 7,283,191 11,667,373 No10 Service 610 14,899,343 3,939,546 Yes11 Manufacturing 590 8,731,914 19,948,036 No12 Manufacturing 824 577,722 31,488,366 No13 Service 762 8,637,970 4,570,078 No14 Manufacturing 601…arrow_forward
- Current Liabilities The following items are accounts on Smiths balance sheet of December 31, 2016: Required Identify which of the accounts should be classified as a current liability on Smiths balance sheet. For each item that is not a current liability, indicate the category of the balance sheet in which it would be classified. Assume the company has the following balance sheet categories: current asset; property, plant, and equipment; long-term investment; intangible asset; current liability; long-term liability; and stockholders equity.arrow_forwardShow the solution in good accounting form How much total current liabilities should be reported on the statement of financial position as of December 31, 20X1?arrow_forwardhttps://www.republictt.com/pdfs/annual-reports/RFHL-Annual-Report-2022.pdf Financial Reporting Analysis: Use Republic Bank Limited Annual Report 2022 to answer the Questions. Assess the company’s working capital position by analyzing its current assets and liabilities using common methods and measures. Evaluate the efficiency of the company’s working capital management strategies, including inventory management, accounts receivable, and accounts payable. Based on your assessment and evaluation above, provide brief recommendations in point form for improving the company’s working capital management practices.arrow_forward
- Consider this simplified balance sheet for Geomorph Trading: Current assets Long-term assets $ 245 Current liabilities Long-term debt 630 Other liabilities Equity $ 875 Required: a. What is the company's debt-equity ratio? (Hint: debt = Current liabilities, Long-term debt, and Other liabilities) Note: Round your answer to 2 decimal places. b. What is the ratio of total long-term debt to total long-term capital? Note: Round your answer to 2 decimal places. c. What is its net working capital? d. What is its current ratio? Note: Round your answer to 2 decimal places. $ 170 215 140 350 $ 875 a Debt-equity ratio b. Long-term debt-to-capital ratio c. Net working capital d. Current ratioarrow_forwardd accounts payable Which of the following is NOT a reason long-term liabilities are significant to users? They represent principal and interest payments the corporation has to pay. They affect the company for many years in the future. C They have an impact on the corporation's quick ratio. d They provide information on the corporation's contractual obligations. a barrow_forwardAnalyzing the ability to pay liabilities Big Beautiful Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you gather the following data: Compute the following ratios for 2018 and 2017, and evaluate the company’s ability to Pay its current Liabilities and total liabilities: a. Current ratio b. Cash ratio c. Acid-test ratio d. Debt ratio e. Debt to equity ratioarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub