, TESTBANK FOR Intermediate Accounting 14e
Canadian Volume 2 Kieso
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Intermediate Accounting, 14Ce (Kieso)
Chapter 13 Non-Financial and Current Liabilities
1) According to the new Conceptual Framework and under ASPE in the CPA Canada Handbook
Part II, which of the following is NOT an essential characteristic of a liability?
A) It embodies a duty or responsibility.
B) The transaction or event that obliges the entity has occurred.
C) The obligation is enforceable on the other party.
D) The entity has little or no discretion to avoid the duty.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
2) A constructive obligation arises when
A) the entity is legally obligated to honour the obligation.
B) the entity makes an unconditional promise to pay money in the future.
C) past or present company practice reveals the entity acknowledges a potential economic
burden.
D) the entity has a conditional obligation that becomes unconditional if an uncertain future event
occurs.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
1
,3) Which of the following statements is NOT true about recognition and subsequent accounting
for financial liabilities?
A) They are initially recognized at their fair value.
B) After acquisition, they continue to be accounted for at fair value.
C) After acquisition, they are generally accounted for at amortized cost.
D) Short-term liabilities, such as accounts payable, are usually recorded at their maturity value.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
4) Which of the following characteristics of non-financial liabilities is NOT correct?
A) The exact timing of these obligations is generally not known.
B) Non-financial obligations are generally easier to measure.
C) Non-financial obligations are subject to different measurement standards than financial
obligations.
D) Non-financial obligations are satisfied with goods and services.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
5) Among Oslo Corp.'s short-term obligations, on its most recent statement of financial position
date, are notes payable totalling $250,000 with the Provincial Bank. These are 90-day notes,
renewable for another 90-day period. These notes should be classified on Oslo's statement of
financial position as
A) current liabilities.
B) deferred charges.
C) long-term liabilities.
D) shareholders' equity.
Answer: A
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
2
,6) Regarding zero-interest-bearing notes,
A) they do not have an interest component.
B) the debtor receives the future value of the note and pays back the present value.
C) any interest is never recognized until the note is repaid.
D) the debtor receives the present value of the note and pays back the future value.
Answer: D
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
7) Under IFRS, even if the entity plans to refinance long-term debt, the current portion must be
reported as a current liability unless
A) long-term financing has been completed after the statement of financial position date, but
before the financial statements are released.
B) management intends to refinance the debt on a long-term basis.
C) at the statement of financial position date, the entity expects to refinance under an existing
agreement for at least a year, and the decision is solely at its discretion.
D) management intends to discharge the debt by issuing shares.
Answer: C
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
8) Which of the following should NOT be included in the current liabilities section of the
statement of financial position?
A) trade accounts payable
B) current portion of long-term debt to be retired by non-current assets
C) short-term zero-interest-bearing notes payable
D) a liability due on demand (callable debt)
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
3
,9) Which of the following is a current liability?
A) preferred dividends in arrears
B) stock dividends distributable
C) preferred cash dividends payable
D) stock splits
Answer: C
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
10) Stock dividends distributable should be classified on the
A) income statement as an expense.
B) statement of financial position as an asset.
C) statement of financial position as a liability.
D) statement of financial position as an item of shareholders' equity.
Answer: D
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
11) Goods and Services Tax (GST)
A) is a value added tax.
B) is a sales tax charged by each province on all taxable goods.
C) is an income tax in some provinces.
D) must be collected by all businesses in Canada.
Answer: A
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
4
,12) Which of the following may be classified as a current liability?
A) stock dividends distributable
B) accounts receivable credit balances
C) losses expected to be incurred within the next 12 months in excess of the company's insurance
coverage
D) tenant's rent deposit not returnable until the end of a long-term lease
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
13) Accounting for GST includes
A) crediting GST Payable to record GST paid on inventory for resale.
B) crediting GST Receivable to record GST collected from customers.
C) debiting GST Receivable to record GST paid to suppliers.
D) debiting GST Payable to record GST collected from customers.
Answer: C
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
14) Regarding Provincial Sales Tax (PST),
A) the purchaser includes any PST paid in the cost of the goods or services.
B) all PST paid is recorded in a "PST Expense" account.
C) all PST paid is recorded in a "PST Recoverable" account.
D) for statement of financial position presentation, a PST registrant "nets" any PST paid against
any PST collected from customers.
Answer: A
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
5
,15) Corporation income taxes payable
A) must always be approved by an external auditor.
B) are reviewed and approved by the Canada Revenue Agency.
C) also apply to proprietorships and partnerships.
D) are always the same under GAAP and Canadian tax laws.
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
16) Which of the following is generally associated with current liabilities classified as accounts
payable?
A) Periodic Payment of Interest - No; Secured by Collateral - No
B) Periodic Payment of Interest - No; Secured by Collateral - Yes
C) Periodic Payment of Interest - Yes; Secured by Collateral - No
D) Periodic Payment of Interest - Yes; Secured by Collateral - Yes
Answer: A
Explanation: Accounts payable generally are zero-interest-bearing and unsecured.
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
17) On November 1, 2027, France Corp. signed a three-month, zero-interest-bearing note for the
purchase of $60,000 of inventory. The maturity value of the note was $60,600, based on the
bank's discount rate of 4%. The adjusting entry prepared on December 31, 2027, in connection
with this note will include a
A) debit to Notes Payable for $400.
B) credit to Notes Payable for $400.
C) debit to Interest Expense for $600.
D) credit to Interest Expense for $200.
Answer: B
Explanation: $60,000 × 4% × 2 ÷ 12 = $400
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
6
,18) On December 1, 2027, Ruby Ltd. borrowed $180,000 from its bank, by signing a four-
month, 5% interest-bearing note. Assuming Ruby has a December 31 year end and does NOT
use reversing entries, the journal entry to record payment of this note on April 1, 2028 will
include a
A) credit to Notes Payable of $180,000.
B) debit to Interest Expense of $3,000.
C) debit to Interest Payable of $2,250.
D) debit to Interest Payable of $750.
Answer: D
Explanation: Interest payable that would have been recorded at Dec. 31/27
$180,000 × 5% × 1 ÷ 12 = $750.
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
19) On February 10, 2028, after issuance of its financial statements for calendar 20273, Mantack
Corp. entered into a financing agreement with Friedman Bank, allowing Mantack Corp. to
borrow up to $4,000,000 at any time through 2029. Amounts borrowed under the agreement bear
interest at 3% above the bank's prime interest rate and mature two years from the date of the
loan. Mantack presently has $1,500,000 of notes payable with Bringham Bank maturing March
15, 2028. The company intends to borrow $2,500,000 under the agreement with Friedman and
pay off the notes payable to Bringham. The agreement with Friedman also requires Mantack to
maintain a working capital level of $9,000,000 and prohibits the payment of dividends on
common shares without prior approval by Friedman. From the above information only, the total
short-term debt of Mantack Corp. on the December 31, 2027, statement of financial position is
A) $0.
B) $1,500,000.
C) $2,500,000.
D) $4,000,000.
Answer: B
Explanation: $1,500,000 (No agreement in place at year end.)
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Analysis
AACSB: Analytic
7
, 20) On December 31, 2027, Gumble Ltd. has $3,150,000 in short-term notes payable due on
February 14, 2028. On January 10, 2028, Gumble arranged a line of credit with Caldi Bank,
which allows Gumble to borrow up to $2,000,000 at 2% above the prime rate for three years. On
February 2, 2028, Gumble borrowed $1,400,000 from Caldi Bank and used $600,000 additional
cash to liquidate $2,000,000 of the short-term notes payable. Assuming Gumble adheres to IFRS,
the amount of the short-term notes payable that should be reported as current liabilities on
Gumble's December 31, 2027, statement of financial position (to be issued on March 5, 2028) is
A) $0.
B) $600,000.
C) $1,400,000.
D) $3,150,000.
Answer: D
Explanation: $3,150,000 (No agreement in place at year end.)
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Analysis
AACSB: Analytic
21) Mason Corp. operates in a province with 8% PST. The store must also collect 5% GST on all
sales. For the month of May, Mason sold $120,000 worth of goods to customers, 40% of which
were cash sales and the balance being on account. Based on the above information, what is the
total debit to accounts receivable for the month of May?
A) $72,000
B) $81,360
C) $54,240
D) $35,600
Answer: B
Explanation: $120,000 × 60% × 1.13 = $81,360
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
8
Canadian Volume 2 Kieso
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Intermediate Accounting, 14Ce (Kieso)
Chapter 13 Non-Financial and Current Liabilities
1) According to the new Conceptual Framework and under ASPE in the CPA Canada Handbook
Part II, which of the following is NOT an essential characteristic of a liability?
A) It embodies a duty or responsibility.
B) The transaction or event that obliges the entity has occurred.
C) The obligation is enforceable on the other party.
D) The entity has little or no discretion to avoid the duty.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
2) A constructive obligation arises when
A) the entity is legally obligated to honour the obligation.
B) the entity makes an unconditional promise to pay money in the future.
C) past or present company practice reveals the entity acknowledges a potential economic
burden.
D) the entity has a conditional obligation that becomes unconditional if an uncertain future event
occurs.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
1
,3) Which of the following statements is NOT true about recognition and subsequent accounting
for financial liabilities?
A) They are initially recognized at their fair value.
B) After acquisition, they continue to be accounted for at fair value.
C) After acquisition, they are generally accounted for at amortized cost.
D) Short-term liabilities, such as accounts payable, are usually recorded at their maturity value.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
4) Which of the following characteristics of non-financial liabilities is NOT correct?
A) The exact timing of these obligations is generally not known.
B) Non-financial obligations are generally easier to measure.
C) Non-financial obligations are subject to different measurement standards than financial
obligations.
D) Non-financial obligations are satisfied with goods and services.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
5) Among Oslo Corp.'s short-term obligations, on its most recent statement of financial position
date, are notes payable totalling $250,000 with the Provincial Bank. These are 90-day notes,
renewable for another 90-day period. These notes should be classified on Oslo's statement of
financial position as
A) current liabilities.
B) deferred charges.
C) long-term liabilities.
D) shareholders' equity.
Answer: A
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
2
,6) Regarding zero-interest-bearing notes,
A) they do not have an interest component.
B) the debtor receives the future value of the note and pays back the present value.
C) any interest is never recognized until the note is repaid.
D) the debtor receives the present value of the note and pays back the future value.
Answer: D
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
7) Under IFRS, even if the entity plans to refinance long-term debt, the current portion must be
reported as a current liability unless
A) long-term financing has been completed after the statement of financial position date, but
before the financial statements are released.
B) management intends to refinance the debt on a long-term basis.
C) at the statement of financial position date, the entity expects to refinance under an existing
agreement for at least a year, and the decision is solely at its discretion.
D) management intends to discharge the debt by issuing shares.
Answer: C
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
8) Which of the following should NOT be included in the current liabilities section of the
statement of financial position?
A) trade accounts payable
B) current portion of long-term debt to be retired by non-current assets
C) short-term zero-interest-bearing notes payable
D) a liability due on demand (callable debt)
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
3
,9) Which of the following is a current liability?
A) preferred dividends in arrears
B) stock dividends distributable
C) preferred cash dividends payable
D) stock splits
Answer: C
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
10) Stock dividends distributable should be classified on the
A) income statement as an expense.
B) statement of financial position as an asset.
C) statement of financial position as a liability.
D) statement of financial position as an item of shareholders' equity.
Answer: D
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
11) Goods and Services Tax (GST)
A) is a value added tax.
B) is a sales tax charged by each province on all taxable goods.
C) is an income tax in some provinces.
D) must be collected by all businesses in Canada.
Answer: A
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
4
,12) Which of the following may be classified as a current liability?
A) stock dividends distributable
B) accounts receivable credit balances
C) losses expected to be incurred within the next 12 months in excess of the company's insurance
coverage
D) tenant's rent deposit not returnable until the end of a long-term lease
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic
13) Accounting for GST includes
A) crediting GST Payable to record GST paid on inventory for resale.
B) crediting GST Receivable to record GST collected from customers.
C) debiting GST Receivable to record GST paid to suppliers.
D) debiting GST Payable to record GST collected from customers.
Answer: C
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
14) Regarding Provincial Sales Tax (PST),
A) the purchaser includes any PST paid in the cost of the goods or services.
B) all PST paid is recorded in a "PST Expense" account.
C) all PST paid is recorded in a "PST Recoverable" account.
D) for statement of financial position presentation, a PST registrant "nets" any PST paid against
any PST collected from customers.
Answer: A
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
5
,15) Corporation income taxes payable
A) must always be approved by an external auditor.
B) are reviewed and approved by the Canada Revenue Agency.
C) also apply to proprietorships and partnerships.
D) are always the same under GAAP and Canadian tax laws.
Answer: B
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
16) Which of the following is generally associated with current liabilities classified as accounts
payable?
A) Periodic Payment of Interest - No; Secured by Collateral - No
B) Periodic Payment of Interest - No; Secured by Collateral - Yes
C) Periodic Payment of Interest - Yes; Secured by Collateral - No
D) Periodic Payment of Interest - Yes; Secured by Collateral - Yes
Answer: A
Explanation: Accounts payable generally are zero-interest-bearing and unsecured.
Diff: 1
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
17) On November 1, 2027, France Corp. signed a three-month, zero-interest-bearing note for the
purchase of $60,000 of inventory. The maturity value of the note was $60,600, based on the
bank's discount rate of 4%. The adjusting entry prepared on December 31, 2027, in connection
with this note will include a
A) debit to Notes Payable for $400.
B) credit to Notes Payable for $400.
C) debit to Interest Expense for $600.
D) credit to Interest Expense for $200.
Answer: B
Explanation: $60,000 × 4% × 2 ÷ 12 = $400
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
6
,18) On December 1, 2027, Ruby Ltd. borrowed $180,000 from its bank, by signing a four-
month, 5% interest-bearing note. Assuming Ruby has a December 31 year end and does NOT
use reversing entries, the journal entry to record payment of this note on April 1, 2028 will
include a
A) credit to Notes Payable of $180,000.
B) debit to Interest Expense of $3,000.
C) debit to Interest Payable of $2,250.
D) debit to Interest Payable of $750.
Answer: D
Explanation: Interest payable that would have been recorded at Dec. 31/27
$180,000 × 5% × 1 ÷ 12 = $750.
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
19) On February 10, 2028, after issuance of its financial statements for calendar 20273, Mantack
Corp. entered into a financing agreement with Friedman Bank, allowing Mantack Corp. to
borrow up to $4,000,000 at any time through 2029. Amounts borrowed under the agreement bear
interest at 3% above the bank's prime interest rate and mature two years from the date of the
loan. Mantack presently has $1,500,000 of notes payable with Bringham Bank maturing March
15, 2028. The company intends to borrow $2,500,000 under the agreement with Friedman and
pay off the notes payable to Bringham. The agreement with Friedman also requires Mantack to
maintain a working capital level of $9,000,000 and prohibits the payment of dividends on
common shares without prior approval by Friedman. From the above information only, the total
short-term debt of Mantack Corp. on the December 31, 2027, statement of financial position is
A) $0.
B) $1,500,000.
C) $2,500,000.
D) $4,000,000.
Answer: B
Explanation: $1,500,000 (No agreement in place at year end.)
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Analysis
AACSB: Analytic
7
, 20) On December 31, 2027, Gumble Ltd. has $3,150,000 in short-term notes payable due on
February 14, 2028. On January 10, 2028, Gumble arranged a line of credit with Caldi Bank,
which allows Gumble to borrow up to $2,000,000 at 2% above the prime rate for three years. On
February 2, 2028, Gumble borrowed $1,400,000 from Caldi Bank and used $600,000 additional
cash to liquidate $2,000,000 of the short-term notes payable. Assuming Gumble adheres to IFRS,
the amount of the short-term notes payable that should be reported as current liabilities on
Gumble's December 31, 2027, statement of financial position (to be issued on March 5, 2028) is
A) $0.
B) $600,000.
C) $1,400,000.
D) $3,150,000.
Answer: D
Explanation: $3,150,000 (No agreement in place at year end.)
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Analysis
AACSB: Analytic
21) Mason Corp. operates in a province with 8% PST. The store must also collect 5% GST on all
sales. For the month of May, Mason sold $120,000 worth of goods to customers, 40% of which
were cash sales and the balance being on account. Based on the above information, what is the
total debit to accounts receivable for the month of May?
A) $72,000
B) $81,360
C) $54,240
D) $35,600
Answer: B
Explanation: $120,000 × 60% × 1.13 = $81,360
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic
8
