What is a contingent liability, and how does it relate to the discounting of a note receivable at the bank?
A contingent liability is a potential liability that may or may not become an actual liability. When a company discounts a note receivable at the bank, the company is contingently liable to the bank upon default by the note's maker.
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A merger between two regional fruit-sellers that do not sell fruit in the same geographical area is an example of a ________
A) market extension merger B) conglomerate merger C) horizontal merger D) vertical merger
Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:
A. $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made. B. $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made. C. $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent. D. None of the answers are correct.
Refer to the instruction above. What does the company save for the year by selecting this low-cost option (for annual requirements of 5,000 units)?
A) $15,000 B) $60,000 C) $65,000 D) $5,000
Which procedure would be of most assistance to an auditor discovering a large credit sale that has erroneously been recorded twice?
A. Confirming accounts receivable. B. Footing the sales journal. C. Observation of the physical inventory count at year-end. D. Tracing the total sales in the sales journal to the general ledger.