An entity received an advance payment for special order goods that are to be

manufactured and delivered within six months. How should the advance payment be
reported?
a. Deferred charge
b. Contra asset account
C. Current liability
d. Noncurrent liability

Gar Company disclosed the following liability account balances on December 31, 2020:

Accounts payable 1,900,000

Bonds payable 3,400,000
Premium on bonds payable 200,000
Deferred tax liability 400,000
Dividends payable 500,000
Income tax payable 900,000
Note payable, due January 31, 2021 600,000

On December 31, 2020, what total amount should be report as current liabilities?
a. 7,100,000
b. 4,300,000
C. 3,900,000
d. 4,100,000

If a long-term debt becomes callable due to the violation of a loan covenant?

a. The debt may continue to be classified as noncurrent. if the covenant can be

renegotiated.
b. The debt should be reclassified as current.
c. Cash must be reserved to pay the debt.
d. Retained earnings must be restricted.

When a product is delivered for which a customer advance has been previously
received, the appropriate journal entry includes sent?
a.A debit to revenue and credit to liability
b.A debit to revenue and credit to asset
c. A debit to asset and credit to revenue
d. A debit to liability and credit to revenue

A department store received cash and 1ssued a gift certificate that is redeemable in
merchandise. When the gift certificate was issued?
a. Deferred revenue account should be decreased.
b. Deterred revenue account should be increased.
C. Revenue account should be decreased.

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 d. Revenue account should be increased.

A retail store received cash and issued gift certificates that are redeemable in
merchandise. How would the deferred revenue account be affected by the redemption
and no redemption of certificates, respectively?
a. Decrease and No effect
b. Decrease and Decrease
c. No effect and No effect
d. No effect and Decrease

When cash is received from customers in the form of are fundable deposit, the cash
account is increased with a Corresponding increase in?
a.Current liability
b.Revenue
c.Shareholders' equity
d.Contributed capital.

An entity sells appliances that include a three warranty. Service calls under the warranty
are perf formed by an independent mechanic under a contract with the entity. Based on
experience, warranty costs are expected to be incurred for each machine sold. When
should the entity recognize these warranty costs?

a. Evenly over the life of the warranty

b. When the service calls are performed.
c. When payments are made to the mechanic.
d. When the machines are sold.

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