Question 1

A payroll register does not include:

Accepted Answer

A) Pay period dates. 
B) Hours worked. 
C) Gross pay and net pay. 
D) Deductions. 
E) Employer tax expenses. 
A) Pay period dates. 
B) Hours worked. 
C) Gross pay and net pay. 
D) Deductions. 
E) Employer tax expenses.

Question 2

The correct times interest earned computation is:

Accepted Answer

A) (Net income + Interest expense + Income taxes)/Interest expense. 
B) (Net income + Interest expense - Income taxes)/Interest expense. 
C) (Net income - Interest expense - Income taxes)/Interest expense. 
D) (Net income - Interest expense + Income taxes)/Interest expense. 
E) Interest expense/(Net income + Interest expense + Income taxes expense). 
A) (Net income + Interest expense + Income taxes)/Interest expense. 
B) (Net income + Interest expense - Income taxes)/Interest expense. 
C) (Net income - Interest expense - Income taxes)/Interest expense. 
D) (Net income - Interest expense + Income taxes)/Interest expense. 
E) Interest expense/(Net income + Interest expense + Income taxes expense).

Question 3

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 $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Accepted Answer

A) $336.00. 
B) $420.00. 
C) $534.60. 
D) $594.00. 
E) $0.00. 
A) $336.00. 
B) $420.00. 
C) $534.60. 
D) $594.00. 
E) $0.00.

Question 4

Interest expense is not:

Accepted Answer

A) Incurred on current liabilities. 
B) Likely to stay the same when sales change. 
C) A fixed expense. 
D) Likely to fluctuate when sales change. 
E) A factor in determining a company's borrowing risk. 
A) Incurred on current liabilities. 
B) Likely to stay the same when sales change. 
C) A fixed expense. 
D) Likely to fluctuate when sales change. 
E) A factor in determining a company's borrowing risk.

Question 5

All of the following are employer payroll taxes except:

Accepted Answer

A) Social Security tax equal to that withheld from employees. 
B) Medicare tax equal to that withheld from employees. 
C) State unemployment tax. 
D) Federal unemployment tax. 
E) Federal income tax equal to that withheld from employees. 
A) Social Security tax equal to that withheld from employees. 
B) Medicare tax equal to that withheld from employees. 
C) State unemployment tax. 
D) Federal unemployment tax. 
E) Federal income tax equal to that withheld from employees.

Question 6

A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each;and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

Accepted Answer

The answer of A company sells sofas with a 6-month...

Question 7

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

Question 8

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue account.What is the journal entry needed to record the transaction by Indigo Company?

Accepted Answer

A) Debit Notes Payable $4,500;credit Accounts Payable $4,500. 
B) Debit Accounts Payable $4,500;credit Notes Payable $4,500. 
C) Debit Accounts Receivable $4,500;credit Notes Payable $4,500. 
D) Debit Cash $4,500;credit Notes Payable $4,500. 
E) Debit Sales $4,500;credit Notes Payable $4,500. 
A) Debit Notes Payable $4,500;credit Accounts Payable $4,500. 
B) Debit Accounts Payable $4,500;credit Notes Payable $4,500. 
C) Debit Accounts Receivable $4,500;credit Notes Payable $4,500. 
D) Debit Cash $4,500;credit Notes Payable $4,500. 
E) Debit Sales $4,500;credit Notes Payable $4,500.

Question 9

A company sold $12,000 worth of bicycles with an extended warranty.It estimates that 2% of these sales will result in warranty work.The current period's entry to record the warranty expense is:

Accepted Answer

A) Debit Warranty Expense $240;credit Cash $240. 
B) Debit Prepaid Warranties $240;credit Warranty Expense $240. 
C) Debit Estimated Warranty Liability $240;credit Cash $240. 
D) Debit Sales Allowances $240;credit Estimated Warranty Liability $240. 
E) Debit Warranty Expense $240;credit Estimated Warranty Liability $240. 
A) Debit Warranty Expense $240;credit Cash $240. 
B) Debit Prepaid Warranties $240;credit Warranty Expense $240. 
C) Debit Estimated Warranty Liability $240;credit Cash $240. 
D) Debit Sales Allowances $240;credit Estimated Warranty Liability $240. 
E) Debit Warranty Expense $240;credit Estimated Warranty Liability $240.

Question 10

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue account.What is the journal entry needed to record the payment of the note by Indigo Company on the maturity date?

Accepted Answer

A) Debit Notes Payable $4,500;debit Interest Expense $75;credit Cash $4,575. 
B) Debit Notes Payable $4,500;credit Interest Expense $75,credit Cash $4,425. 
C) Debit Cash $4,575;credit Interest Revenue $75;credit Notes Payable $4,500. 
D) Debit Notes Payable $4,500;debit Interest Expense $112;credit Cash $4,612. 
E) Debit Cash $4,575;credit Interest Revenue $75;credit Notes Receivable $4,500. 
A) Debit Notes Payable $4,500;debit Interest Expense $75;credit Cash $4,575. 
B) Debit Notes Payable $4,500;credit Interest Expense $75,credit Cash $4,425. 
C) Debit Cash $4,575;credit Interest Revenue $75;credit Notes Payable $4,500. 
D) Debit Notes Payable $4,500;debit Interest Expense $112;credit Cash $4,612. 
E) Debit Cash $4,575;credit Interest Revenue $75;credit Notes Receivable $4,500.

Question 11

An employee earned $4,600 in February working for an employer.Cumulative earnings of the previous pay periods are $4,800.The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 4.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount the employer should record as payroll taxes expense for the month of February?

Accepted Answer

A) $581.90 
B) $110.00 
C) $351.90 
D) $461.90 
E) $230.00 
A) $581.90 
B) $110.00 
C) $351.90 
D) $461.90 
E) $230.00

Question 12

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

Accepted Answer

A) Credit union. 
B) FDIC insured bank. 
C) Federal depository bank. 
D) National bank. 
E) Federal Reserve Bank. 
A) Credit union. 
B) FDIC insured bank. 
C) Federal depository bank. 
D) National bank. 
E) Federal Reserve Bank.

Question 13

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

Accepted Answer

A) Debit Accounts Receivable $24,000;credit Notes Receivable $24,000 
B) Debit Accounts Payable $24,000;credit Notes Payable $24,000 
C) Debit Accounts Payable $24,160;credit Notes Payable $24,160 
D) Debit Notes Payable $24,000;debit Interest Expense $160;credit Accounts Payable $24,160 
E) Debit Notes Payable $24,000;debit Interest Expense $160;credit Cash $24,160 
A) Debit Accounts Receivable $24,000;credit Notes Receivable $24,000 
B) Debit Accounts Payable $24,000;credit Notes Payable $24,000 
C) Debit Accounts Payable $24,160;credit Notes Payable $24,160 
D) Debit Notes Payable $24,000;debit Interest Expense $160;credit Accounts Payable $24,160 
E) Debit Notes Payable $24,000;debit Interest Expense $160;credit Cash $24,160

Question 14

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 $117,000 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) $8,950.50. 
B) $5,638.05. 
C) $3,312.45. 
D) $2,684.60. 
E) $0,since the FICA tax is only deducted from an employee's pay. 
A) $8,950.50. 
B) $5,638.05. 
C) $3,312.45. 
D) $2,684.60. 
E) $0,since the FICA tax is only deducted from an employee's pay.

Question 15

A company sells tablet computers for $1,300 each.The price includes a two-year warranty.During the current year,the company sells 400 tablets.On the basis of past experience,the warranty costs are estimated to be $280 per tablet.The actual warranty costs (paid in cash)by the company during the current year were $65,000.Prepare general journal entries to record the (a)estimated warranty expense and (b)warranty repair costs during current year.

Accepted Answer

The answer of A company sells tablet computers for $1,300...

Question 16

A contingent liability is:

Accepted Answer

A) Always of a specific amount. 
B) A potential obligation that depends on a future event arising from a past transaction or event. 
C) An obligation not requiring future payment. 
D) An obligation arising from the purchase of goods or services on credit. 
E) An obligation arising from a future event. 
A) Always of a specific amount. 
B) A potential obligation that depends on a future event arising from a past transaction or event. 
C) An obligation not requiring future payment. 
D) An obligation arising from the purchase of goods or services on credit. 
E) An obligation arising from a future event.

Question 17

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

Question 18

FICA taxes include:

Accepted Answer

A) Social Security and Medicare taxes. 
B) Charitable giving. 
C) Employee state income tax. 
D) Federal and state unemployment taxes. 
E) Employee federal income tax. 
A) Social Security and Medicare taxes. 
B) Charitable giving. 
C) Employee state income tax. 
D) Federal and state unemployment taxes. 
E) Employee federal income tax.

Question 19

Maturity date: September 17 (12 days in July,31 days in August,17 days in September)

Accepted Answer

The answer of Maturity date: September 17 (12 days in...

Question 20

Contingent liabilities are recorded or disclosed unless they are:

Accepted Answer

A) Probable and estimable. 
B) Remote. 
C) Reasonably possible. 
D) Probable and not estimable. 
E) Possible and estimable. 
A) Probable and estimable. 
B) Remote. 
C) Reasonably possible. 
D) Probable and not estimable. 
E) Possible and estimable.

Exam 11: Current Liabilities and Payroll Accounting

A payroll register does not include:

The correct times interest earned computation is:

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 $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Interest expense is not:

All of the following are employer payroll taxes except:

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

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue account.What is the journal entry needed to record the transaction by Indigo Company?

A company sold $12,000 worth of bicycles with an extended warranty.It estimates that 2% of these sales will result in warranty work.The current period's entry to record the warranty expense is:

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue account.What is the journal entry needed to record the payment of the note by Indigo Company on the maturity date?

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

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 $117,000 maximum per year and the rate for FICA Medicare 1.45%.The employer's total FICA payroll tax for this employee is:

A contingent liability is:

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:

FICA taxes include:

Maturity date: September 17 (12 days in July,31 days in August,17 days in September)

Contingent liabilities are recorded or disclosed unless they are:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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