WGU D249 Financial ACCT 2 Questions & Answers/ (Top 2024/2025 EXAM REVIEW PAPERS / GRADED A+/ 100% Accurate)

WGU D249 Financial ACCT 2 Questions & Answers What defines liabilities? -Obligations arising from past transactions and payable in assets or services in the future 90-day notes, renewable for another 90-day period are classified on the BS as - -Current liabilities For what purpose is the current liability section of the balance sheet of primary importance to bankers - To assist in understanding the entity's liquidity What, if any, is the relationship between current liabilities and a company's operating cycle? -In order be classified as current, liability obligations must be due and payable within one year or the operating cycle of the company, whichever is less. Loss contingencies -if probable and reasonably estimated, must be accrued and reported on the balance sheet. IF - it is not probable (but possible), must be disclosed in the notes to the financial statements. When is a contingent liability recorded -In order to record a contingent liability, both of the following conditions must be met: (1) it is probable (not possible) that the liability has been incurred, and (2) the amount of the liability can be reasonably estimated. How are accrued liabilities disclosed in the financial statements -. Accrued liabilities are treated as if the expense occurred in the reporting period and are included on the balance sheet as regular liabilities. Acid Test Ratio -(Cash + Short Term Investments + Accounts Receivable) / Current Liabilities. What does the current ratio inform you about a company? -The current ratio is calculated as current assets divided by current liabilities. This ratio informs you about the liquidity of the company or the ability of the company to pay off it's current liability obligations. What is the interest rate written in the terms of the bond indenture known as -the stated, coupon, or nominal rate. What is the generally accepted method of accounting for gains or losses from the early extinguishment of debt? -A difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemptio