Question 1

A liability may exist even if there is uncertainty about whom to pay,when to pay,or how much to pay.

Accepted Answer

A) True 
 B)False

Question 2

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

Accepted Answer

A)   Debit Estimated Bonus Payable $32,500; credit Cash $32,500.
B)   Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.
C)   No entry since the bonuses are not paid until January.
D)   Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500.
E)   Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500.F) B) and E)
G) All of the above

Question 3

An employee earned $4,600 in February working for an employer.The FICA tax rate for Social Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The employee has $644 in federal income taxes withheld and has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a retirement plan each month.The employer pays the $200 remainder of the health insurance premium and an equal amount of contribution to the retirement fund.What is the amount of net pay for the employee for the month of February?

Accepted Answer

A)   $3,094.10
B)   $3,496.00
C)   $3,604.10
D)   $3,446.00
E)   $2,634.10F) D) and E)
G) B) and E)

Question 4

General Co.entered into the following transactions involving short-term notes payable.
On May 14,General purchased $40,000 merchandise from Steller Co.,terms are 2/15,n/30.General uses the perpetual inventory system.On May 29,General replaced the May 14 account payable with a 60-day,$36,000 note bearing 8% annual along with paying $4,000 in cash.On July 28,General paid the amount due on the note at maturity.
Prepare journal entries for all the preceding transactions and events.

Accepted Answer

The answer of General Co.entered into the following transactions involving...

Question 5

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Accepted Answer

A) True 
 B)False

Question 6

Match each of the following terms with the appropriate definitions.
-Taxes that fund Social Security and Medicare,assessed on both employer and employees under the Federal Insurance Contributions Act.

Accepted Answer

A)  Long-term liability
B)  Warranty
C)  FUTA taxes
D)  FICA taxes
E)  Contingent liabilityF) Net payG) Withholding allowanceH) Estimated liabilityI) Merit ratingJ) Wage bracket withholding tableK) None of the above
L) A) and I)

Question 7

Debt guarantees are usually disclosed as a contingent liability.

Accepted Answer

A) True 
 B)False

Question 8

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $2,900 in the current period and had cumulative pay for prior periods of $5,800.What is the amount of unemployment taxes the employer must pay on this employee's wages for the current period?

Accepted Answer

A)   $420.00.
B)   $348.00.
C)   $72.00.
D)   $174.00.
E)   $0.00.F) B) and E)
G) A) and B)

Question 9

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games.Record the advance ticket sales on April 30.Record the revenue earned for the first home game played on August 14.

Accepted Answer

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Question 10

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 11

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

Accepted Answer

The answer of Times interest earned is computed by dividing...

Question 12

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

Accepted Answer

A)   FICA rate.
B)   Tax withholding rate.
C)   Pay rate.
D)   Credit rating.
E)   Merit rating.F) All of the above
G) D) and E)

Question 13

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date,the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Accepted Answer

A) True 
 B)False

Question 14

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Accepted Answer

A) True 
 B)False

Question 15

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Accepted Answer

A) True 
 B)False

Question 16

Match each of the following terms with the appropriate definitions.
-Total compensation earned by an employee.

Accepted Answer

A)  Short-term note payable
B)  Deferred income tax liability
C)  Current liabilities
D)  Warranty
E)  Employee benefitsF) Federal depository bankG) Payroll registerH) Gross payI) Payroll bank accountJ) Times interest earnedK) B) and I)
L) A) and E)

Question 17

Amounts received in advance from customers for future products or services:

Accepted Answer

A)   Are revenues.
B)   Increase income.
C)   Are liabilities.
D)   Are not allowed under GAAP.
E)   Require an outlay of cash in the future.F) B) and D)
G) A) and B)

Question 18

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

Question 19

Gross pay is:

Accepted Answer

A)   Take-home pay.
B)   Total compensation earned by an employee before any deductions.
C)   Salaries after taxes are deducted.
D)   Deductions withheld by an employer.
E)   The amount of the paycheck.F) A) and C)
G) A) and D)

Question 20

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Current Liabilities

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

Correct Answer
verified

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

Correct Answer
verified

A note payable can be used to extend the payment due on an account payable.

Correct Answer
verified

Debt guarantees are usually disclosed as a contingent liability.

Correct Answer
verified

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Correct Answer
verified

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

Correct Answer
verified

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

Correct Answer
verified

Correct Answer
verified

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Correct Answer
verified

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date,the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Taxes that fund Social Security and Medicare,assessed on both employer and employees under the Federal Insurance Contributions Act.

Correct Answer
verified

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games.Record the advance ticket sales on April 30.Record the revenue earned for the first home game played on August 14.

Correct Answer
verified
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\text { Apr...
View Answer

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Total compensation earned by an employee.

Correct Answer
verified

Correct Answer
verified

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct Answer
verified

Amounts received in advance from customers for future products or services:

Correct Answer
verified

Correct Answer
verified

A liability may exist even if there is uncertainty about whom to pay,when to pay,or how much to pay.

Correct Answer
verified

Gross pay is:

Correct Answer
verified

Exam 9: Accounting for Current Liabilities

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

Correct AnswerverifiedShow Answer

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

Correct AnswerverifiedShow Answer

A note payable can be used to extend the payment due on an account payable.

Correct AnswerverifiedShow Answer

Debt guarantees are usually disclosed as a contingent liability.

Correct AnswerverifiedShow Answer

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Correct AnswerverifiedShow Answer

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date,the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Taxes that fund Social Security and Medicare,assessed on both employer and employees under the Federal Insurance Contributions Act.

Correct AnswerverifiedShow Answer

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games.Record the advance ticket sales on April 30.Record the revenue earned for the first home game played on August 14.

Correct Answerverified\[\begin{array} { l l l l } \text { Apr...View AnswerShow Answer

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Total compensation earned by an employee.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct AnswerverifiedShow Answer

Amounts received in advance from customers for future products or services:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A liability may exist even if there is uncertainty about whom to pay,when to pay,or how much to pay.

Correct AnswerverifiedShow Answer

Gross pay is:

Correct AnswerverifiedShow Answer

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\[\begin{array} { l l l l }
\text { Apr...
View Answer

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