Question

In: Accounting

True or False 1._____ Dividends in arrears on cumulative preferred stock need not be recorded as...

True or False

1._____ Dividends in arrears on cumulative preferred stock need not be recorded as a liability.

2._____All long-term debt maturing within the next year must be classified as a current liability on the balance sheet.

3._____ A company is a plaintiff in a lawsuit. It should accrue the estimated gain from the judgment if information indicates that it is virtually certain and the amount can be reasonably estimated.

4._____The revenue from a service-type warranty that covers several years should all be recognized in the period the warranty is sold.

5._____Under an assurance-type warranty, companies charge warranty costs only to the period in which they comply with the warranty.

6._____Prepaid insurance should be included in the numerator when computing the acid-test (quick) ratio.

7._____Current liabilities are usually recorded and reported in financial statements at their full maturity value.

8._____Debt securities held as an investment include corporate bonds and convertible debt, but not U.S. government securities.

9._____Securities classified as trading securities are securities bought and held primarily for sale in the near-term to generate income on short-term price differences.

10._____Unrealized holding gains and losses are recognized in net income for available-for-sale debt securities.

Expert Solution

Answer:

1. True Dividends in arrears on cumulative preferred stock need not be recorded as a liability.

2. False All long- term-debt maturing within the next year must be classified as a current liability on the balance sheet.

3. False A company is a plaintiff in a lawsuit. It should accrue the estimated gain from the judgement if information indicates that it is virtually certain and the amount can be reasonably estimated.

4. False The revenue from a service type warranty that covers several years should all be recognized in the period the warranty is sold.

5. False Under an assurance type warranty, companies charge warranty costs only to the period in which they comply with the warranty.

6. False Prepaid insurance should be included in the numerator when computing the acid-test ( quick ) ratio.

7. True Current liabilities are usually recorded and reported in financial statements at their full maturity value.

8. False Debt securities held as an investment include corporate bonds and convertible debt, but not U.S. government securities.

9. False Securities classified as trading securities are securities bought and held primarily for sale in the near-term to generate income on short-term price differences.

10. False Unrealized holding gains and losses are recognized in net income for available-for-sale debt securities.

ekkarill92 answered 1 year ago

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