Question 1

Match between columns
                        Premises: Payment of a 30-year term loan due this year
FICA taxes payable
Salaries payable
Warranty work completed this year
Accounts payable
60-day promissory note
Debt guarantees
Payment of a 4-year term loan due this year
Income taxes payable
Payment of a 30-year term loan due next year. (The company's operating cycle is 2 months.)

Accepted Answer

The Answer of Long-term liability and Not a liability and is...

Question 2

During August, Boxer Company sells $356,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,800 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the customer warranty repairs is:

Accepted Answer

A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B)  Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.
C)  Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.
D)  Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.
E)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400. D

Question 3

Payroll is an example of a contingent liability for the employer.

Accepted Answer

A) True 
 B)False

Question 4

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Accepted Answer

A)  $3,312.45.
B)  $5,638.05.
C)  $8,950.50.
D)  $2,684.60.
E)  $0, since the FICA tax is only deducted from an employee's pay.

Question 5

Gary Marks is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the amount of the employer's payroll taxes expenses for this employee? (Round your intermediate calculations to two decimal places.)

Accepted Answer

A)  $420.00
B)  $2,009.21
C)  $2,506.48
D)  $1,131.31
E)  $1,054.04

Question 6

If the times interest earned ratio:

Accepted Answer

A)  Is greater than 1.5, the company is in default.
B)  Increases, then risk decreases.
C)  Is greater than 3.0, the company is likely carrying too much debt.
D)  Increases, then risk increases.
E)  Is less than 1.5, the company is carrying too little debt.

Question 7

The times interest earned ratio reflects:

Accepted Answer

A)  A company's ability to pay interest even if sales decline.
B)  The relation between assets and liabilities.
C)  A company's ability to pay its operating expenses on time.
D)  The relation between income and debt.
E)  A company's profitability.

Question 8

All of the following statements regarding uncertainty in liabilities are true except:

Accepted Answer

A)  Liabilities can involve uncertainty in whom to pay.
B)  A company can be aware of an obligation but not know how much will be required to settle it.
C)  A company can have an obligation of a known amount to a known creditor but not know when it must be paid.
D)  A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date.
E)  A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.

Question 9

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer, which is the Form W-4.

Accepted Answer

A) True 
 B)False

Question 10

Describe contingent liabilities and how to account for and/or report them.

Accepted Answer

Contingent liabilities are uncertain obl...

Question 11

An employee earned $128,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer's total FICA payroll tax for this employee is:

Accepted Answer

A)  $9,210.25.
B)  $9,830.25.
C)  $8,950.50.
D)  $879.75.
E)  $0, since the FICA tax is only deducted from an employee's pay.

Question 12

The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of FICA - Medicare withheld from this employee for the month of June?

Accepted Answer

A)  $1,240.00
B)  $7,347.00
C)  $290.00
D)  $1,147.00
E)  $268.25

Question 13

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Accepted Answer

A)  Payroll bank account.
B)  Federal depository bank account.
C)  Employee's Individual Earnings account.
D)  Payroll register account.
E)  Employees' bank account.

Question 14

Identify and explain the types of employer payroll taxes.

Accepted Answer

Employers are required to contribute an ...

Question 15

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:

Accepted Answer

A)  1.75
B)  0.29
C)  2.50
D)  3.50
E)  0.50

Question 16

Employee vacation benefits:

Accepted Answer

A)  Increase net income.
B)  Are recorded as an expense when the employee retires.
C)  Are estimated liabilities.
D)  Are contingent liabilities.
E)  Are recorded as an expense when the employee takes a vacation.

Question 17

A short-term note payable:

Accepted Answer

A)  Is a contingent liability.
B)  Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.
C)  Is an estimated liability.
D)  Is not a liability until the due date.
E)  Cannot be used to extend the payment period for an account payable.

Question 18

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Accepted Answer

A)  Debit Unearned Revenue $11,250, credit Sales $11,250.
B)  Debit Prepaid Subscriptions $33,750; credit Unearned Revenue $33,750.
C)  Debit Unearned Revenue $45,000; credit Cash $45,000.
D)  Debit Prepaid Subscriptions $11,250, credit Sales $11,250.
E)  Debit Cash $11,250, credit Sales $11,250. A

Question 19

Recording employee payroll deductions may involve:

Accepted Answer

A)  Expenses for the gross wages and salaries.
B)  Liabilities to the employer.
C)  Liabilities to federal and state governments.
D)  Expenses for state unemployment.
E)  Expenses for the employer portion of any medical insurance.

Question 20

Employer payroll taxes:

Accepted Answer

A)  Are payable for up to a maximum $117,000 of employee earnings.
B)  Are paid by the employee.
C)  Are added expenses beyond that for the wages and salaries earned by employees.
D)  Represent the social security taxes withheld from employees.
E)  Represent the federal taxes withheld from employees.

Exam 11: Current Liabilities and Payroll Accounting

Classify each of the following items as either:

Correct Answer
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D

Payroll is an example of a contingent liability for the employer.

Correct Answer
verified

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Correct Answer
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Correct Answer
verified

If the times interest earned ratio:

Correct Answer
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The times interest earned ratio reflects:

Correct Answer
verified

All of the following statements regarding uncertainty in liabilities are true except:

Correct Answer
verified

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer, which is the Form W-4.

Correct Answer
verified

Describe contingent liabilities and how to account for and/or report them.

Correct Answer
verified
Contingent liabilities are uncertain obl...
View Answer

An employee earned $128,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer's total FICA payroll tax for this employee is:

Correct Answer
verified

Correct Answer
verified

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Correct Answer
verified

Identify and explain the types of employer payroll taxes.

Correct Answer
verified
Employers are required to contribute an ...
View Answer

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:

Correct Answer
verified

Employee vacation benefits:

Correct Answer
verified

A short-term note payable:

Correct Answer
verified

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Correct Answer
verified
A

Recording employee payroll deductions may involve:

Correct Answer
verified

Employer payroll taxes:

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

Classify each of the following items as either:

Correct AnswerverifiedD

Payroll is an example of a contingent liability for the employer.

Correct AnswerverifiedShow Answer

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the times interest earned ratio:

Correct AnswerverifiedShow Answer

The times interest earned ratio reflects:

Correct AnswerverifiedShow Answer

All of the following statements regarding uncertainty in liabilities are true except:

Correct AnswerverifiedShow Answer

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer, which is the Form W-4.

Correct AnswerverifiedShow Answer

Describe contingent liabilities and how to account for and/or report them.

Correct AnswerverifiedContingent liabilities are uncertain obl...View AnswerShow Answer

An employee earned $128,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer's total FICA payroll tax for this employee is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Correct AnswerverifiedShow Answer

Identify and explain the types of employer payroll taxes.

Correct AnswerverifiedEmployers are required to contribute an ...View AnswerShow Answer

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:

Correct AnswerverifiedShow Answer

Employee vacation benefits:

Correct AnswerverifiedShow Answer

A short-term note payable:

Correct AnswerverifiedShow Answer

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Correct AnswerverifiedA

Recording employee payroll deductions may involve:

Correct AnswerverifiedShow Answer

Employer payroll taxes:

Correct AnswerverifiedShow Answer

Correct Answer
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D

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Contingent liabilities are uncertain obl...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Employers are required to contribute an ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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