To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities True / False Questions The mixture of debt and equity for a business is called its capital structure TRUE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: A current liability is always a short-term obligation expected to be paid within one year of the balance sheet date FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: A current ratio that is high according to an industry average might mean the company may have excessive inventory levels or slow moving inventory items TRUE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: A current ratio can be manipulated by management through paying off current liabilities before the end of the accounting period TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-1 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities A liability, to be reported on the balance sheet, must have a fixed, known amount to be paid in the future FALSE AACSB Tag: Relative Thinking Difficulty: Hard L.O.: The FICA (social security) tax is a matching tax with a portion paid by both the employer and the employee TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: The accounts payable turnover ratio is computed by dividing sales by average accounts payable FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Interest is a function of the amount borrowed times the interest rate FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-2 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities A company borrowed $100,000 at 6% interest on September 1, 2009 Assuming no adjusting entries have been made during the year, the entry to record interest accrued on December 31, 2009 would include a debit to interest expense and a credit to interest payable for $3,000 FALSE AACSB Tag: Analytic Difficulty: Medium L.O.: 10 All contingent liabilities should be classified as either current or long-term liabilities on the balance sheet for the current period FALSE AACSB Tag: Communication Difficulty: Medium L.O.: 11 A contingent liability that is "probable" and can be "reasonably estimated" must be accrued and reported as a liability TRUE AACSB Tag: Communication Difficulty: Medium L.O.: 12 When current liabilities decrease during the year, then we create a positive effect on cash flow from operating activities FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-3 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 13 Excessive or slow moving inventory could be the reason working capital is low FALSE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 14 A secured debt is where the borrowing company pledges specific assets as collateral for the loan TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 15 As corporations have expanded globally, it has become common to borrow money in foreign currencies as a way to lessen exposure to exchange rate risk TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 16 For the present value of a single amount, the compounding period may only be once a year FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-4 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 17 An annuity is a series of consecutive payments, each one increasing by a fixed dollar amount over the payment amount of the prior year FALSE AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 18 In the recognition of revenues and expenses, temporary and permanent differences between the financial statements and the tax return will result in deferred taxes FALSE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Sup A 19 Tax evasion involves illegal means to avoid paying taxes, but tax planning considers legal means to postpone paying taxes TRUE AACSB Tag: Ethics Difficulty: Medium L.O.: Sup B 20 A reciprocal relationship exists between the "future value of $1" and the "present value of $1." TRUE AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Sup D 9-5 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities Multiple Choice Questions 21 A liability is measured in terms of its A amount owed plus interest B current cash equivalent C historical cost D none of the other answers is correct AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 22 Which of the following statements is true? A Use of more debt in the company's capital structure usually reduces the rate of return generated for stockholders B Use of more debt in the capital structure can lead to positive financial leverage if we can generate a return on investment in assets greater than the cost of borrowing C Use of more debt decreases the level of risk assumed by a company D All statements are false AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 23 Which of the following statements is true? A Liabilities are initially recorded at the amount of their principle plus interest B Liabilities can decrease the return on stockholders' equity if the interest rate paid is less than the return on assets C Capital structure is the relative proportion of debt and equity financing D Liabilities are current if due within 60 days AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-6 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 24 Which of the following is false? A Current liabilities are those that will be satisfied within one year or the operating cycle, whichever is longer B Liquidity is the ability of the company to meet its total obligations C Current liabilities impact a company's liquidity D Working capital is equal to current assets minus current liabilities AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 25 The current ratio is computed as follows A current assets divided by total assets B current assets divided by current liabilities C current liabilities divided by total assets D current liabilities divided by current assets AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 26 A company has a current ratio of 1.9 before paying off a large current liability with cash Following this payment, the current ratio will be A greater than 1.9 B less than 1.9 C equal to 1.9 D greater than 1.9 or less than 1.9 depending upon the dollar amount involved AACSB Tag: Analytic Difficulty: Medium L.O.: 9-7 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 27 The following is a partial list of account balances from the books of Probst Enterprise at the end of 2009: Based solely upon these balances, the amount of current liabilities appearing on Probst Enterprise's 2009 year-end balance sheet should be A $24,900 B $24,100 C $23,700 D $20,500 AACSB Tag: Analytic Difficulty: Medium L.O.: 28 In 2009, General Tech reported a current ratio of 2.75 and in 2008 it was 3.10 Which of the following is a potential cause of a fall in this ratio? A An increase in accounts payable B A decrease in inventories C A decrease in short-term borrowings D Both an increase in accounts payable and a decrease in inventories could cause the ratio to fall AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 9-8 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 29 If a current ratio has been increasing over the past several years, which of the following would cause the ratio to rise? A An increase in accounts payable B An increase in inventories C An increase in short-term borrowings D A decrease in prepaid rent AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 30 In 2009, The Western Air Freight Company reported current assets of $12,094 million, total assets of $31,327 million, current liabilities of $10,971 million, and total liabilities of $15,392 million What was their current ratio for 2009? A 1.63 B 1.10 C 2.12 D 1.89 AACSB Tag: Analytic Difficulty: Easy L.O.: 31 Chavez Chocolates had a current ratio of 1.74 in 2008 Which of the following would cause the ratio to decrease in 2009? A A decrease in cash and equivalents and short-term investments B An increase in cash and equivalents and short-term investments C An increase in current assets that exceeded the increase in current liabilities D Current assets as a percentage of total assets increased while current liabilities as a percentage of total liabilities and stockholders' equity decreased AACSB Tag: Relative Thinking Difficulty: Hard L.O.: 9-9 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 32 Which of the following would most likely cause an increase in the current ratio? A A short-term borrowing of $100 B A purchase of $100 of inventory for cash C A $100 payment to suppliers thereby reducing accounts payable D A $100 receipt of cash from a customer's accounts receivable AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 33 Which of the following is always a current liability? A Pension obligations B Estimated warranty liability C Accounts payable D Bonds payable AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 34 Which of the following usually is not a current liability? A Wages payable B Rent revenue collected in advance C Dividends payable D Pension obligations AACSB Tag: Relative Thinking Difficulty: Easy L.O.: 9-10 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 88 The following is a partial list of account balances for Coen, Inc as of December 31, 2010 Required: Prepare the liability section of Coen Inc.'s classified balance sheet for December 31, 2010 AACSB Tag: Analytic Difficulty: Medium L.O.: 9-37 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 89 The following data is available for Tommy's Toys for the years 2006 through 2009: A Calculate the accounts payable turnover ratio for the following years: 2009 2008 2007 B Calculate the number of days it is taking Tommy's Toys to pay their vendors (assume a 365 day year): 2009 2008 2007 C Explain whether Tommy's Toys is doing a better job of paying their vendors in a timely manner A1 7.34($7,506/ [1,023 + 1,022]/2) A2 8.05 ($7,646/ [1,022 + 878]/2) A3 8.79 ($7,799/ [878 + 896]/2) B1 50 days (365/7.34) B2 45 days (365/8.05) B3 42 days (365/8.79) C Over the three year period, Tommy's Toys accounts payable turnover ratio has decreased and the number of days it takes them to pay vendors has increased from 42 in 2007 to 50 days in 2009 If their suppliers offer them credit terms of 30 days, then Tommy's Toys is taking almost twice that time to pay them It would be a good idea to compare the accounts payable turnover ratio of competitors with that of Tommy's Toys to see if they are in line with other similar companies AACSB Tag: Analytic Difficulty: Medium L.O.: 9-38 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 90 Answer the following four questions A What is a contingent liability? B When must a contingent liability be recorded through a journal entry? C When should a contingent liability be disclosed in the footnotes to the financial statements? D When is disclosure of a contingent liability not required? A Contingent liabilities are potential liabilities that arise due to past events B Whether or not the potential liability becomes a recorded liability depends upon the outcome of future events For example, a company is currently involved in a product liability lawsuit The company may have to pay the plaintiff if the settlement is unfavorable A contingent liability must be recorded if it is probable that the future events will occur and the amount can be reasonably estimated C Contingent liabilities should be disclosed in the footnotes to the financial statements if it is probable that future events will occur but the amount cannot be reasonably estimated Footnote disclosure should also occur if it is reasonably possible that the future events will occur whether or not it can be reasonably estimated D Disclosure is not required if the probability of future events occurring is remote AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-39 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 91 In a recent year, The Walt Disney Company reported the following increases or decreases in current assets and current liabilities Identify whether each of these increases or decreases caused cash to increase or decrease Show increases with a (+) in front of the amount and decreases with a ( ) in front of the amount in the column labeled cash effect (1) +$366, (2) +$103, (3) $848, (4) $179, (5) +$292, (6) +$69 AACSB Tag: Analytic Difficulty: Easy L.O.: 9-40 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 92 Melissa is considering several possible investment alternatives when the market rate of interest is 8% Option 1: Melissa could receive $10,000 today Option 2: Melissa could receive $3,000 at the end of each year for four years Option 3: Melissa could receive $15,000 five years from now Required: A Calculate the present value of each option assuming Melissa can earn 8% on any of the investment funds B Which option results in the greatest financial benefit to Melissa? AACSB Tag: Analytic Difficulty: Medium L.O.: 9-41 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 93 Meade Company has accumulated a cash fund to use for future expansion The following accumulation schedule for the fund was prepared The column titles are omitted on purpose: Required: Refer to the schedule above and respond to the following questions A What was the fund's goal in dollars? B What was the annual contribution to the fund? C What interest rate was earned? D What amount of interest was earned in 2006? 2008? E Give the entry on 12/31/2007 A $22,001 B $4,811 C $433 $4,811 = 9% $905 $10,055 = 9% $1,419 $15,771 = 9% D 2006: -0-; 2008: $905 AACSB Tag: Analytic Difficulty: Medium L.O.: 9-42 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 94 Border Company purchased a truck that cost $17,000 The company signed a $17,000 note payable that specified four equal annual payments (at each year-end), each of which includes a payment on the principal and interest on the unpaid balance at 10% per annum The present value of an annuity factor is 3.1699 (I = 10%, n = 4.) A Compute the amount of each equal payment (round to the nearest dollar) B Give the entry to record the purchase of the truck C Give the entry to record the first annual payment on the note (assume no interest has been accrued during the year) D Will the interest paid with the first annual payment be more or less than the interest paid with the second annual payment? Explain your answer A $17,000 3.1699 (present value of annuity) = $5,363 D The interest paid on the first installment will be more than the interest on the second payment because the principal is lower AACSB Tag: Analytic Difficulty: Hard L.O.: 9-43 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 95 Fold and Hold Corporation purchased a machine which had a current cash equivalent cost of $38,971 on January 1, 2009 Fold and Hold paid cash of $10,000 and signed an interestbearing note for the balance, payable in six equal annual installments on each December 31 beginning with December 31, 2009 The note specified a 10% interest rate on the unpaid balance The present value of an annuity factor is 4.3553 (I = 10%, n = 6.) A Give the entry to record the purchase on January 1, 2009 (round to the nearest dollar) B Give the entry to record the first installment payment on December 31, 2009 (round to the nearest dollar) AACSB Tag: Analytic Difficulty: Hard L.O.: 9-44 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 96 Information Company purchased an asset that cost $70,000 on January 1, 2009 Arrangements were made with the supplier to pay $10,000 cash on January 1, 2009, and the balance was to be paid over a three-year period, with equal annual payments of $24,553 to be made at the end of 2009, 2010, and 2011 Each payment will include principal plus interest on the unpaid balance at 11% per year A Complete the following table: B Give the entry for the payment on December 31, 2010 C Explain the change, over time, on the amount of interest and the balance of the debt principal C Interest decreases over time because part of each debt payment reduces principal As a result, over time the debt principal decreases each year AACSB Tag: Analytic Difficulty: Medium L.O.: 9-45 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 97 On January 1, 2009, Mission Company agreed to buy some equipment from Anna Company Mission Company signed a note, agreeing to pay Anna Company $500,000 for the equipment on December 31, 2011 The market rate of interest for this note was 10% Required: A Prepare the journal entry Mission Company would record on January 1, 2009 related to this purchase B Prepare the December 31, 2009, adjusting entry to record interest expense related to the note for the first year Assume that no adjusting entries have been made during the year C Prepare the December 31, 2010, adjusting entry to record interest expense related to the note for the second year Assume that no adjusting entries have been made during the year D Prepare the entry Mission Company would record on December 31, 2011, the due date of the note to record interest expense for the third year and payment of the note Assume that no adjusting entries have been made during the year 9-46 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities AACSB Tag: Analytic Difficulty: Hard L.O.: 98 Why are present value concepts and applications so important when companies purchase equipment financed by the seller? Present value concepts are very important in seller-financed purchases because the debt payments will include principal and interest payments The equipment should be capitalized at an amount equal to the present value of the purchase That is, the asset account should reflect what the equipment could have been acquired for in terms of "today's dollars" The additional amounts for interest are charges for borrowing These interest amounts should be reported as interest expense as incurred AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-47 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 99 The following table values are provided for use in solving the following independent problems (show computations): A Company A deposited $20,000 in a savings account on January 1, 2009, that will accumulate 6% interest each December 31 What will be the fund balance at the end of Year 5? How much interest will be earned by the end of Year 5? B Company B needs to accumulate a $50,000 fund by making five equal annual deposits Assuming a 7% interest accumulation, how much must be deposited at the end of each year? C Company C has a new machine that has an estimated life of five years and a $5,000 residual value Assuming an 8% interest rate, what is the present value of the estimated residual value? D Company D owes a $50,000 debt that is now due (January 1, 2009) Arrangements have been made to pay it off in five equal annual installments starting December 31, 2009 (an ordinary annuity situation) Assuming 8% interest, how much will be the annual payment? Give the entry for Company D above for the first payment on December 31, 2009 on the note payable Assume that no adjusting entries have been made during the year A $20,000 1.3382 (Fn = 5; I = 6%) = $26,764 $26,764 – 20,000 = $6,764 B $50,000 5.7507 (Fn = 5; I = 7%) = $8,695 C $5,000 0.6806 (Pn = 5; I = 8%) = $3,403 D AACSB Tag: Analytic Difficulty: Hard L.O.: Sup D 9-48 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 100 At the beginning of Year 1, Parks Corporation placed $10,000 in a savings account at 9% A Assuming no withdrawals, complete the following tabulation (round to the nearest dollar) B Give the required journal entry at the end of Year 10 to record only the year 10 earnings: AACSB Tag: Analytic Difficulty: Medium L.O.: Sup D 9-49 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities Matching Questions 101 Match the liabilities with their usual classification on the balance sheet Bond payable, current portion Mortgage payable (due in two years) FICA taxes payable Accounts payable Notes payable (due in three years) Rent payable Interest payable Income tax payable Accounts receivable 10 Accumulated depreciation 11 Cash deposits (advances) received from customers for services to be performed in six months 12 Employee income taxes withheld 13 Bond payable (due in six years) 14 Allowance for doubtful accounts 15 Deferred income tax (a credit balance) Current liability Current liability Current liability Long-term liability Current liability Long-term liability Current liability Long-term liability Current or longterm liability Not a liability 11 13 Current liability Not a liability Current liability Not a liability Current liability 12 14 15 10 AACSB Tag: Relative Thinking Difficulty: Medium L.O.: 9-50 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank,visit visithttp://downloadslide.blogspot.com http://downloadslide.blogspot.com Chapter 009: Reporting and Interpreting Liabilities 102 Indicate the interest concept which each of the following items exemplifies A single sum is deposited to create a fund at the end of three years The amount of the fund is to be determined A current debt is to be paid in four equal installments at the end of each of the next four years The amount of each installment is to be determined An equal amount is deposited in a savings account at the end of each year in order to accumulate a fund for a trip to Japan at the end of the fourth year The amount of the annual deposit is to be determined The cash equivalent price of a machine is to be determined assuming a specified single sum is to be paid two years after the acquisition date Present value of $1 Future value of $1 Future value of annuity of $1 Present value of annuity of $1 AACSB Tag: Relative Thinking Difficulty: Medium L.O.: Sup D 9-51 ©2009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e ... L.O.: 9-2 ©2 009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit... L.O.: 9-3 ©2 009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit... D 9-5 ©2 009 McGraw-Hill Inc Test Bank to accompany Libby Financial Accounting 6/e To Todownload downloadmore moreslides, slides,ebook, ebook,solutions solutionsand andtest testbank, bank, visit