9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

ACC309_Quiz 01 Intangible Assets and

Current Liabilities
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Multiple Choice- Current Liabilities Theories

 Which is a characteristic of a current liability but not a non current liability? 1 point

Settlement is expected within the normal operating cycle of within 12 months,

whichever is longer

Present obligation that entails settlement by probable future transfer of cash, goods
or services

The obligating event creating the liability has already occurred

Unavoidable obligation

Clear selection

What is the relationship between current liabilities and an operating cycle? 1 point

Current liabilities are the result of operating transactions

Current liabilities cannot exceed the amount incurred in one operating cycle

Liquidation of current liabilities is reasonably expected within the operating cycle or

one year, whichever is longer

There is no relationship between the two

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

It is a marketing scheme whereby an entity grants award credits to 1 point

customers and the entity can redeem the award credita in exchange for free
or discounted goods.

Customer loyalty program

Marketing program

Premium plan

Loyalty award

Clear selection

The award credits granted to customers under a customer loyalty program is 1 point
often described as

Credits

Points

Awards

Royalty

Clear selection

Which of the following should be included in current liabilities? 1 point

All of these are included in current liabilities

Unearned revenue

Trade notes payable

Short-term zero-interest bring note payable

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

The most relevant measurement of liabilities at initial recognition and fresh 1 point
start measurement should always reflect

Historical cost

The single most likely minimum or maximum possible amount

The expectation of the management

The credit standing of the entity

Clear selection

Magazine subscriptions collected in advance are treated as 1 point

Magazine subscription refund in the income statement in the period collected

A contra account to magazine subscriptions receivable

Deferred revenue in the shareholders' equity section

Deferred revenue in the liability section

Clear selection

When an entity received an advance payment for special order goods that are 1 point
to be manufactured and delivered within six months, the advance payment is
reported as

Contra asset account

Deferred charge

Noncurrent liability

Current liability

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

An entity is a retailer of home appliance and offers a service contract on 1 point

each appliance sold. The entity sells appliances on installment contracts but
all service contracts must be paid in full at the time of sale. Collections
received for service contracts shall be recorded as an increase in

Shareholders’ equity valuation account

Sales contracts receivable valuation account

Service revenue account

Deferred revenue account

Clear selection

How would the proceeds received from the advance sale of nonrefundable 1 point

tickets for a theatrical performance reported before the performance

Revenue to the extent of related costs expended

Revenue for the entire proceeds

Unearned revenue for the entire proceeds

Unearned revenue to the extent of related costs expended

Clear selection

Which is the correct definition of a provision? 1 point

A liability which cannot be easily measured

An obligation to transfer funds to an entity

A liability of uncertain timing or amount

A possible obligation arising from past event

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

A provision shall be recognized as liability when 1 point

An entity has a present obligation as a result of a past event.

All of these are required for the recognition of a provision as liability.

It is probable that an outflow of resources embodying economic benefits will be

required to settle the obligation.

The amount of the obligation can be measured reliably.

Clear selection

When the provision arises from a single obligation, the estimate of the 1 point
amount

Midpoint of the possible outcomes.

Reflects the weighting of all possible outcomes by their associated probabilities.

Is the individual most likely outcome adjusted for the effect of other possible
outcomes.

Is determined as the individual most likely outcome.

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

Which statement is NOT true in relation to the measurement of a provision? 1 point

Future events that may affect the amount required to settle the obligation shall be
reflected in the amount of the provision where there is sufficient objective evidence
that the future events will occur.

Where the effect of the time value of money is material, the amount of a provision
shall be the present value of the expenditure expected to settle the obligation

Gains from expected disposal of assets shall be taken into account in measuring a
provision.

The risks and uncertainties that inevitably surround many events and circumstances
shall be taken into account in reaching the best estimate of a provision.

Clear selection

Provisions shall be discounted if the effect of the time value of money is 1 point

material. Which of the following is INCORRECT regarding the discount rate?

Does not reflect risks for which future cash flow estimates have been adjusted

Is a post-tax discount rate

Reflects risks specific to the liability

Reflects current market assessment of the time value of money

Clear selection

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9/27/22, 3:04 PM ACC309_Quiz 01 Intangible Assets and Current Liabilities

A contingent liability shall be recognized when 1 point

It is certain that funds are available to pay the amount of the claim.

It is probable that a liability has been incurred even though the amount of the loss
cannot be reliably measured.

Any lawsuit is actually filed against an entity.

The amount of the loss can be reliably measured and it is probable prior to issuance
of financial statements than a liability has been incurred

Clear selection

Disclosure usually is not required for 1 point

Contingent losses that are reasonably possible and cannot be reliably measured.

Contingent losses that are probable and cannot be reliably measured.

Contingent gains that are probable and can be reliably measured.

Contingent losses that are remote and can be reliably measured.

Clear selection

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