Question 1

Define liabilities and explain the difference between current and long-term liabilities.

Accepted Answer

Liabilities are probable future payments

Question 2

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

Accepted Answer

A) True 
 B)False

Question 3

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 $127,200 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) $2,009.21 
B) $1,131.31 
C) $2,506.48 
D) $420.00 
E) $1,054.04 
A) $2,009.21 
B) $1,131.31 
C) $2,506.48 
D) $420.00 
E) $1,054.04

Question 4

A short-term note payable:

Accepted Answer

A) 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. 
B) Is a contingent liability. 
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. 
A) 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. 
B) Is a contingent liability. 
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 5

Estimated liabilities commonly arise from all of the following except:

Accepted Answer

A) Warranties. 
B) Vacation benefits. 
C) Income taxes. 
D) Employee benefits. 
E) Unearned revenues. 
A) Warranties. 
B) Vacation benefits. 
C) Income taxes. 
D) Employee benefits. 
E) Unearned revenues.

Question 6

A company has a selling price of $1,800 each for its printers.Each printer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 printers,and 400 printers were serviced under the warranty at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

Accepted Answer

A) $26,000 
B) $45,000 
C) $55,000 
D) $60,000 
E) $90,000 
A) $26,000 
B) $45,000 
C) $55,000 
D) $60,000 
E) $90,000

Question 7

Identify and explain the types of employer payroll taxes.

Accepted Answer

Employers are required to contribute an

Question 8

Uncertainties such as natural disasters are:

Accepted Answer

A) Not contingent liabilities because they are future events not arising from past transactions or events. 
B) Contingent liabilities because they are future events arising from past transactions or events. 
C) Disclosed because of their usefulness to financial statements. 
D) Estimated liabilities because the amounts are uncertain. 
E) Reported in the same way as debt guarantees. 
A) Not contingent liabilities because they are future events not arising from past transactions or events. 
B) Contingent liabilities because they are future events arising from past transactions or events. 
C) Disclosed because of their usefulness to financial statements. 
D) Estimated liabilities because the amounts are uncertain. 
E) Reported in the same way as debt guarantees.

Question 9

A ________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

Accepted Answer

The answer of A ________ is a seller's obligation to...

Question 10

A company has three employees.Total salaries for the month of January were $8,000.The federal income tax rate for all employees is 15%.The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%.Calculate the amount of employee taxes withheld and prepare the company's journal entry to record the January payroll assuming these were the only deductions.

Accepted Answer

The answer of A company has three employees.Total salaries for...

Question 11

The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

Accepted Answer

A) True 
 B)False

Question 12

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $127,200 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.The employee has $80 in federal income taxes withheld.What is the amount of this employee's net pay for the first week of January?

Accepted Answer

A) $784.00 
B) $139.98 
C) $724.02 
D) $644.02 
E) $923.98 
A) $784.00 
B) $139.98 
C) $724.02 
D) $644.02 
E) $923.98

Question 13

A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.

Accepted Answer

A) True 
 B)False

Question 14

Accounting for contingent liabilities covers three possibilities: (1)The future event is probable and the amount cannot be reasonably estimated; (2)The future event is remote or unlikely to recur; (3)The likelihood of the liability to occur is impossible.

Accepted Answer

A) True 
 B)False

Question 15

The annual Federal Unemployment Tax Return is:

Accepted Answer

A) Form 940. 
B) Form 1099. 
C) Form 104. 
D) Form W-2. 
E) Form W-4. 
A) Form 940. 
B) Form 1099. 
C) Form 104. 
D) Form W-2. 
E) Form W-4.

Question 16

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Accepted Answer

Estimated liabilities are known obligati

Question 17

Employee vacation benefits:

Accepted Answer

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

Question 18

Required payroll deductions include income taxes,Social Security taxes,pension and health contributions,union dues,and donations.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

Which of the following do not apply to unearned revenues?

Accepted Answer

A) Also called deferred revenues. 
B) Amounts received in advance from customers for future delivery of products or services. 
C) Also called collections in advance. 
D) Also called prepayments. 
E) Amounts to be received in the future from customers for delivery of products or services in the current period. 
A) Also called deferred revenues. 
B) Amounts received in advance from customers for future delivery of products or services. 
C) Also called collections in advance. 
D) Also called prepayments. 
E) Amounts to be received in the future from customers for delivery of products or services in the current period.

Define liabilities and explain the difference between current and long-term liabilities.

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

A short-term note payable:

Estimated liabilities commonly arise from all of the following except:

Identify and explain the types of employer payroll taxes.

Uncertainties such as natural disasters are:

A ________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.

Accounting for contingent liabilities covers three possibilities: (1)The future event is probable and the amount cannot be reasonably estimated; (2)The future event is remote or unlikely to recur; (3)The likelihood of the liability to occur is impossible.

The annual Federal Unemployment Tax Return is:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Employee vacation benefits:

Required payroll deductions include income taxes,Social Security taxes,pension and health contributions,union dues,and donations.

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

Which of the following do not apply to unearned revenues?

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 9: Reporting and Analyzing Current Liabilities

Define liabilities and explain the difference between current and long-term liabilities.

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

A short-term note payable:

Estimated liabilities commonly arise from all of the following except:

Identify and explain the types of employer payroll taxes.

Uncertainties such as natural disasters are:

A ________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.

Accounting for contingent liabilities covers three possibilities: (1)The future event is probable and the amount cannot be reasonably estimated; (2)The future event is remote or unlikely to recur; (3)The likelihood of the liability to occur is impossible.

The annual Federal Unemployment Tax Return is:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Employee vacation benefits:

Required payroll deductions include income taxes,Social Security taxes,pension and health contributions,union dues,and donations.

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

Which of the following do not apply to unearned revenues?

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters