41) Potential liabilities that depend on future events arising out of past events are called:
A) long-term liabilities.
B) estimated liabilities.
C) contingent liabilities.
D) current liabilities.
42) A company has a lawsuit pending with regard to patent infringement. The amount of the loss can be estimated and has a probable chance of occurrence. What journal entry is required?
A) debit Lawsuit Loss and credit Cash
B) debit Estimated Lawsuit Loss and credit Cash
C) debit Cash and credit Estimated Lawsuit Liability
D) debit Estimated Lawsuit Loss and credit Estimated Lawsuit Liability
43) A company has a pending lawsuit that has a remote possibility of being settled in favor of the plaintiff who is a former employee. What should the company do?
A) Nothing.
B) Prepare a note to the financial statements.
C) Prepare a journal entry.
D) Prepare a note to the financial statements and a journal entry.
44) On December 31, 2014, a note payable of $200,000 has installments of $50,000 due yearly, beginning on December 31, 2015. On December 31, 2014, how will the note payable be reported on the balance sheet?
A) $50,000 current liability and $100,000 long-term liability
B) $200,000 long-term liability
C) $200,000 current liability
D) $50,000 current liability and $150,000 long-term liability
45) What is the accounts payable turnover?
A) a measure of liquidity
B) a measure of the number of times a year a company is able to pay off its accounts payable
C) purchases on account from suppliers divided by average accounts payable
D) all of the above
46) A company reports Cost of Goods Sold of $400,000, Ending Inventory of $50,000, Beginning Inventory of $30,000, Ending Accounts Payable of $40,000 and Beginning Accounts Payable of $32,000. What is the accounts payable turnover?
A) 8.0
B) 10.0
C) 11.1
D) 11.7
47) A company reports Cost of Goods Sold of $400,000, Ending Inventory of $50,000, Beginning Inventory of $30,000, Ending Accounts Payable of $40,000 and Beginning Accounts Payable of $32,000. What is the days' payable outstanding?
A) 31.2 days
B) 32.9 days
C) 36.5 days
D) 45.6 days
48) Company A has an accounts payable turnover of 9.5. Company B has an accounts payable turnover of 7.3. Which company is more liquid?
A) Company A is more liquid.
B) Company B is more liquid.
C) Both are equally liquid.
D) None of the above are correct.
49) A company reports Cost of Goods Sold of $305,000, Ending Inventory of $100,000, Beginning Inventory of $10,000, Ending Accounts Payable of $90,000 and Beginning Accounts Payable of $60,000. What is the accounts payable turnover? (Round calculations to one decimal place.)
A) 3.4
B) 4.1
C) 4.4
D) 5.3
50) A company reports Cost of Goods Sold of $305,000, Ending Inventory of $100,000, Beginning Inventory of $10,000, Ending Accounts Payable of $90,000 and Beginning Accounts Payable of $60,000. What is the days' payable outstanding? (Round calculations to one decimal place.)
A) 68.9 days
B) 83 days
C) 89 days
D) 107.4 days