Question 1

Depending upon when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.

Accepted Answer

A) True 
 B)False

Question 2

The Young Company has the following assets and liabilities: $$\begin{array} { | l | l | } 
\hline \text { ASSETS } & \
\hline \text { Cash } & \
\hline \text { Accounts receivable } & 15,000 \
\hline \text { Inventory } & 30,000 \
\hline \text { Equipment } & 50,000 \
\hline & \
\hline \text { LIABILITIES } & \
\hline \text { Current portion of long-term debt } & 10,000 \
\hline \text { Accounts payable } & 2,000 \
\hline \text { Long-term debt } & 25,000 \
\hline
\end{array}$$ Determine the quick ratio rounded to one decimal point).

Accepted Answer

A)  6.7 
B)  13.0 
C)  4.2 
D)  3.5 
A)  6.7 
B)  13.0 
C)  4.2 
D)  3.5

Question 3

An employee's take-home pay is equal to gross pay less all voluntary deductions.

Accepted Answer

A) True 
 B)False

Question 4

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are

Accepted Answer

A)  $49,750 
B)  $47,000 
C)  $49,000 
D)  $51,000 
A)  $49,750 
B)  $47,000 
C)  $49,000 
D)  $51,000

Question 5

During its first year of operations, a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000. The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year?

Accepted Answer

A)  $15,000 
B)  $36,500 
C)  $6,500 
D)  $21,500 
A)  $15,000 
B)  $36,500 
C)  $6,500 
D)  $21,500

Question 6

The discount on a note payable is charged to an account that has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 7

Scott Company sells merchandise with a one-year warranty. Sales consisted of 2,500 units in Year 1 and 2,000 units in Year 2. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2 for the Year 1 sales. Similarly, 30% of repairs will be made in Year 2 and 70% in Year 3 for the Year 2 sales. In the Year 3 income statement, how much of the warranty expense shown will be due to Year 1 sales?

Accepted Answer

A)  $6,000. 
B)  $14,000. 
C)  $20,000. 
D)  $0. 
A)  $6,000. 
B)  $14,000. 
C)  $20,000. 
D)  $0.

Question 8

Most employers are required to withhold federal unemployment taxes from employee earnings.

Accepted Answer

A) True 
 B)False

Question 9

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once.
-Current assets/Current liabilities

Accepted Answer

A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements 
A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Question 10

Medicare taxes are paid by both the employee and the employer.

Accepted Answer

A) True 
 B)False

Question 11

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once.
-Measures the "instant" debt­paying ability of a company

Accepted Answer

A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements 
A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Question 12

Use the following information and calculate the quick ratio for Davis Company and for Bender Inc.
a) Calculate the quick ratio for each company.
b) Comment on which one is more able to meet current liabilities.

Accepted Answer

a)Davis Co. Quick ratio: $1,06

Question 13

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90­day, discounted note payable of $100,000 is

Accepted Answer

A)  $6,000 
B)  $1,500 
C)  $500 
D)  $3,000 
A)  $6,000 
B)  $1,500 
C)  $500 
D)  $3,000

Question 14

Journalize the following entries on the books of the borrower and creditor. Label accordingly. Assume a 360-day year is used for interest calculations.)Jun. 1 Regis Co. purchased merchandise on account from Winthrop Co., $60,000, terms n/30.
Jun. 30 Regis Co. issued a 60-day, 5% note for $60,000 on account.
Aug. 29 Regis Co. paid the amount due.

Accepted Answer

Regis Co. Borrower)June 1 Merchandise In

Question 15

A pension plan that promises employees a fixed annual pension benefit, based on years of service and compensation, is called an)

Accepted Answer

A)  defined contribution plan 
B)  defined benefit plan 
C)  unfunded plan 
D)  compensation plan 
A)  defined contribution plan 
B)  defined benefit plan 
C)  unfunded plan 
D)  compensation plan

Question 16

Internal controls for cash payments apply to payrolls.

Accepted Answer

A) True 
 B)False

Question 17

The journal entry a company uses to record pension rights that have not been funded for its salaried employees at the end of the year is

Accepted Answer

A)  debit Salary Expense; credit Cash 
B)  debit Pension Expense; credit Unfunded Pension Liability 
C)  debit Pension Expense; credit Unfunded Pension Liability and Cash 
D)  debit Pension Expense; credit Cash 
A)  debit Salary Expense; credit Cash 
B)  debit Pension Expense; credit Unfunded Pension Liability 
C)  debit Pension Expense; credit Unfunded Pension Liability and Cash 
D)  debit Pension Expense; credit Cash

Question 18

Martin Jackson receives an hourly wage rate of $30, with time and a half for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to Jackson?

Accepted Answer

A)  $1,470.00 
B)  $1,009.75 
C)  $1,097.95 
D)  $460.25 
A)  $1,470.00 
B)  $1,009.75 
C)  $1,097.95 
D)  $460.25

Question 19

The borrower issues a note payable to a creditor.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following taxes are employers required to withhold from employees?

Accepted Answer

A)  FICA tax 
B)  FICA tax, state, and federal unemployment tax 
C)  state unemployment tax 
D)  federal unemployment tax 
A)  FICA tax 
B)  FICA tax, state, and federal unemployment tax 
C)  state unemployment tax 
D)  federal unemployment tax

Exam 10: Current Liabilities and Payroll

Depending upon when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.

The Young Company has the following assets and liabilities: ASSETS Cash Accounts receivable 15,000 Inventory 30,000 Equipment 50,000 LIABILITIES Current portion of long-term debt 10,000 Accounts payable 2,000 Long-term debt 25,000 Determine the quick ratio rounded to one decimal point).

An employee's take-home pay is equal to gross pay less all voluntary deductions.

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are

The discount on a note payable is charged to an account that has a normal credit balance.

Most employers are required to withhold federal unemployment taxes from employee earnings.

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -Current assets/Current liabilities

Medicare taxes are paid by both the employee and the employer.

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -Measures the "instant" debt­paying ability of a company

Use the following information and calculate the quick ratio for Davis Company and for Bender Inc. a) Calculate the quick ratio for each company. b) Comment on which one is more able to meet current liabilities.

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90­day, discounted note payable of $100,000 is

A pension plan that promises employees a fixed annual pension benefit, based on years of service and compensation, is called an)

Internal controls for cash payments apply to payrolls.

The journal entry a company uses to record pension rights that have not been funded for its salaried employees at the end of the year is

The borrower issues a note payable to a creditor.

Which of the following taxes are employers required to withhold from employees?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Filters

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -Measures the "instant" debtpaying ability of a company

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90day, discounted note payable of $100,000 is