Fundamental question - Accounting Basics by ClassOf1

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									              Sub: Accounts                                                                  Topic: Accounting Basics



              Question:
              Short question on fundamental accounting.

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              1. Current liabilities are obligations that will be paid:

                  a.    With cash.
                  b.    Within one year.
                  c.    Within one year or the operating cycle, whichever is shorter.
                  d.    Within one year or the operating cycle, whichever is longer.
                  e.    Both (a) and (b).

                  Answer: B. Within one year.

              2. Upscale Department Stores records all sales at amounts that include a 5% sales tax. During
                 November, total recorded sales were $735,000. The portion of these sales that should be
                 recorded as a tax liability is:

                  a. $0
                  b. $35,000
                  c. $36,750
                  d. $70,000

                  Answer: B. $35,000

              3. The account Discount on Notes Payable:
                 a. Usually has a credit balance and is added to the Notes Payable account on the balance
                     sheet.
                 b. Is used only when a note has a stated interest rate.
                 c. Contains future interest expense that will be incurred over the life of a note.
                 d. Contains an
								
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