SOLVED

8) Explain the nature of current liabilities and how these are accounted for in the financial statements. 9) Explain the meaning of the following terms: current assets, trade payables, expected value, deferred revenue and warranty. 10) For a $100,000 trade payable with terms of 2/10, net 45, how much would be reported as “purchase discount lost” under the gross method if a payment was made after 60 days? A) $0 B) $2,000 C) $4,500 D) $10,000 11) For a $200,000 trade payable with terms of 2/15, net 50, how much would be reported as “purchase discount lost” under the net method if a payment was made after 60 days? A) $0 B) $4,000 C) $5,000 D) $30,000 12) How are “purchase discounts lost” reported in the financial statements? A) As a reduction of sales. B) As an increase in liability. C) As an increase in inventory. D) As an expense item. 13) Which statement is correct? A) Trade payables are supported by a written promise to pay. B) Trade payables with no discount terms are expected to be paid in full. C) Notes payable are legally enforceable and can only be interest bearing. D) Notes payables are recognized at the face value or transaction price.