Question : 81. Region Jet has a $50 million liability at December : 1255982

Accounting

81. Region Jet has a $50 million liability at December 31, 2015, of which $10 million is payable in 2016. In its December 31, 2015 balance sheet, the company reports the $50 million debt as

a.A $50 million current liability on the balance sheet.

b.A $50 million long-term liability on the balance sheet.

c.A $10 million current liability and a $40 million long-term liability on the balance sheet.

d.A $40 million current liability and a $10 million long-term liability on the balance sheet.

82. United Supply has a $5 million liability at December 31, 2015, of which $1 million is payable in each of the next five years. United Supply reports the liability on the balance sheet as:

a.A $5 million current liability.

b.A $5 million long-term liability.

c.A $1 million current liability and a $4 million long-term liability.

d.A $4 million current liability and a $1 million long-term liability.

83. If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is reasonably possible, a contingent liability should bea. Disclosed, but not reported as a liability.b. Disclosed and reported as a liability.c. Neither disclosed nor reported as a liability.d. Reported as a liability, but not disclosed.

84. If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is probable, a contingent liability should bea. Disclosed, but not reported as a liability.b. Disclosed and reported as a liability.c. Neither disclosed nor reported as a liability.d. Reported as a liability, but not disclosed.

85. Reeves Co. filed suit against Higgins, Inc., seeking damages for copyright violations. Higgins’ legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally likely. How should Higgins report this litigation?a. As a liability for $100,000 with disclosure of the range.b. As a liability for $150,000 with disclosure of the range. c. As a liability for $200,000 with disclosure of the range.d. As a disclosure only. No liability is reported.

86. Away Travel filed suit against West Coast Travel seeking damages for copyright violations. West Coast Travel’s legal counsel believes it is reasonably possible that West Coast Travel will settle the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally likely. How should West Coast Travel report this litigation?a. As a liability for $100,000 with disclosure of the range.b. As a liability for $150,000 with disclosure of the range. c. As a liability for $200,000 with disclosure of the range.d. As a disclosure only. No liability is reported.

87. Away Travel filed suit against West Coast Travel seeking damages for copyright violations. Away Travel’s legal counsel believes it is probable (but not certain) that Away Travel will win the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally likely. How should Away Travel report this litigation?a. As a receivable for $100,000 with disclosure of the range.b. As a receivable for $150,000 with disclosure of the range. c. As a receivable for $200,000 with disclosure of the range.d. As a disclosure only. No receivable is reported.

88. Young Company is involved in a lawsuit. The liability that could arise as a result of this lawsuit should be recorded on the books if the probability of Young owing money as a result of the lawsuit is:

Remote and the amount can be reasonably estimated.

Probable and the amount can be reasonably estimated.

Reasonably possible and the amount can be reasonably estimated.

Probable and the amount cannot be reasonably estimated.

89. Ogden Motors, Inc. is involved in a lawsuit. It is reasonably possible that the jury will find in favor of the plaintiff and Ogden will owe ten million dollars. What is the appropriate reporting of this lawsuit and what is the effect on the balance sheet?

Record; decrease stockholders’ equity and increase liabilities.

Record; increase stockholders’ equity and decrease liabilities.

Disclose; no effect on the balance sheet.

Disclose; decrease stockholders’ equity and decrease liabilities.

90. Amplify, Inc. was sued by Sound City for $50,000. Sound City feels very confident that it will win the case and will be awarded the full amount. Amplify, Inc. feels it is probable that it will lose the case and pay Sound City the full amount. Which of the following is correct?

Amplify, Inc. would record a loss and contingent liability for $50,000.

Sound City would record a gain and lawsuit receivable for $50,000.

Sound City would record nothing.

Both a. and c. are correct.

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July 1, 2023

61.When there is a shortage in a market, prices are likely to:

A. Fall because buyers do not wish to buy as much as sellers want to sell.

B. Rise because some buyers will offer to pay a higher price.

C. Fall because sellers are likely to reduce their production if prices rise.

D. Rise because the government will put a price ceiling in place.

62.If a market shortage exists:

A. The invisible hand will work to reduce the price.

B. The only solution is for the government to raise the price.

C. Producers will compete for customers by reducing prices.

D. Consumers will compete for the product by offering to pay more.

63.A market surplus occurs when:

A. People cannot buy the amount of goods and services that they are willing and able to buy.

B. The price is less than the equilibrium price.

C. The quantity supplied exceeds the quantity demanded at a given price.

D. There is a price ceiling.

64.When there is a surplus in a market, prices are likely to fall because:

A. Buyers do not wish to buy as much as sellers want to sell.

B. Some buyers will offer to pay a higher price, initiating a move up the supply curve.

C. Sellers are likely to increase their production.

D. Buyers will wait for the government to establish a price floor.

65.If a market surplus exists:

A. The only resolution is for the government to set the price.

B. Consumers will compete for the product buy offering to pay more.

C. Producers will compete for customers by reducing prices.

D. The equilibrium price is equal to the price ceiling.

66.If demand is constant, a decrease in the supply of gasoline will cause the equilibrium price:

A. To rise and quantity to fall.

B. And quantity both to rise.

C. To fall and quantity to rise.

D. And quantity both to fall.

67.If demand is constant, a leftward shift in the supply curve will result in:

A. A decrease in equilibrium quantity and a lower equilibrium price.

B. An increase in equilibrium quantity and a lower equilibrium price.

C. A decrease in equilibrium quantity and a higher equilibrium price.

D. An increase in equilibrium quantity and a higher equilibrium price.

68.The price of chocolate candy bars rises. This could be due to:

A. A decrease in the wage rate paid to workers in the candy bar factories.

B. A decrease in the cost of chocolate, which is used to produce candy bars.

C. A subsidy by the federal government for the producers of chocolate candy bars.

D. A decrease in the number of chocolate candy bar producers.

69.If demand is unchanged, a rightward shift in the supply curve for plasma TVs will cause:

A. A decrease in equilibrium quantity and a higher equilibrium price.

B. An increase in equilibrium quantity and a higher equilibrium price.

C. An increase in equilibrium quantity and a lower equilibrium price.

D. A decrease in equilibrium quantity and a lower equilibrium price.

70.Which of the following would cause a decrease in the price of automobiles?

A. A technological advance in automobile manufacturing.

B. An increase in the wages paid to automobile assembly line workers.

C. A decrease in the cost of gasoline.

D. An increase in the number of buyers.