Question 1

Which of the following is the most desirable quick ratio?

Accepted Answer

A)  2.20 
B)  1.80 
C)  1.95 
D)  1.50 
A)  2.20 
B)  1.80 
C)  1.95 
D)  1.50

Question 2

The following totals for the month of April were taken from the payroll register of Magnum Company: $\begin{array}{ll}
\text { Salaries } & \$ 10,000 \
\text { FICA taxes withheld } & 750 \
\text { Income taxes withheld } & 2,000 \
\text { Medical insurance deductions } & 450 \
\text { Unemployment taxes } & 420
\end{array}$ The entry to record accrual of employer's payroll taxes would include a

Accepted Answer

A)  debit to Payroll Tax Expense for $1,170 
B)  debit to FICA Taxes Payable for $1,500 
C)  credit to Payroll Tax Expense for $420 
D)  debit to Payroll Tax Expense for $1,620 
A)  debit to Payroll Tax Expense for $1,170 
B)  debit to FICA Taxes Payable for $1,500 
C)  credit to Payroll Tax Expense for $420 
D)  debit to Payroll Tax Expense for $1,620

Question 3

The Crafter Company has the following assets and liabilities: $$\begin{array} { | l | c | } 
\hline \text { ASSETS } & \
\hline \text { Cash } & \$ 28,000 \
\hline \text { Accounts receivable } & 15,000 \
\hline \text { Inventory } & 20,000 \
\hline \text { Equipment } & 50,000 \
\hline & \
\hline \text { LIABILITIES } & \
\hline \text { Current portion of long-term debt } & 10,000 \
\hline \text { Accounts payable } & 2,000 \
\hline \text { Long-term debt } & 25,000 \
\hline
\end{array}$$ Determine the quick ratio rounded to one decimal point).

Accepted Answer

A)  5.3 
B)  3.6 
C)  3.3 
D)  2.3 
A)  5.3 
B)  3.6 
C)  3.3 
D)  2.3

Question 4

On August 1, Batson Company issued a 60-day note with a face amount of $140,000 to Jergens Company for merchandise inventory. Assume a 360-day year is used for interest calculations.)
a. Determine the proceeds of the note assuming the note carries an interest rate of 6%.
b. Determine the proceeds of the note assuming the note is discounted at 6%.

Accepted Answer

a. $140,000
b. $138,

Question 5

Hall Company sells merchandise with a one-year warranty. In the current year, sales consisted of 4,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in the current year and 70% in the next year. In the current year's income statement, Hall should show warranty expense of

Accepted Answer

A)  $45,000 
B)  $13,500 
C)  $31,500 
D)  $0 
A)  $45,000 
B)  $13,500 
C)  $31,500 
D)  $0

Question 6

Quick assets include

Accepted Answer

A)  cash, cash equivalents, receivables, prepaid expenses, and inventory 
B)  cash, cash equivalents, receivables, and prepaid expenses 
C)  cash, cash equivalents, receivables, and inventory 
D)  cash, cash equivalents, and receivables 
A)  cash, cash equivalents, receivables, prepaid expenses, and inventory 
B)  cash, cash equivalents, receivables, and prepaid expenses 
C)  cash, cash equivalents, receivables, and inventory 
D)  cash, cash equivalents, and receivables

Question 7

Thomas Martin receives an hourly wage rate of $40, 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, 48; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the gross pay for Martin?

Accepted Answer

A)  $449 
B)  $1,730 
C)  $2,080 
D)  $1,581 
A)  $449 
B)  $1,730 
C)  $2,080 
D)  $1,581

Question 8

During May, Blast sold 650 portable CD players for $50 each and provided a one-year warranty with each unit. Each CD player cost Blast $25 to produce. If 10% of the goods sold typically need to be replaced over the warranty period, for what amount should Blast debit Product Warranty Expense in May?

Accepted Answer

A)  $3,250 
B)  $1,625 
C)  $650 
D)  $1,300 
A)  $3,250 
B)  $1,625 
C)  $650 
D)  $1,300

Question 9

Federal unemployment taxes are paid by the employer and the employee.

Accepted Answer

A) True 
 B)False

Question 10

Mobile Sales has five sales employees which receive weekly paychecks. Each earns $11.50 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in federal income tax, 3% in state income tax, 6% of gross in social security tax, 1.5% of gross in Medicare tax, and 0.5% in state disability insurance. Journalize the pay period ending January 19 which will be paid to the employees January 26.

Accepted Answer

The answer of Mobile Sales has five sales employees which...

Question 11

The employee's earnings record would contain which data that the payroll register would probably not contain?

Accepted Answer

A)  deductions 
B)  payment 
C)  earnings 
D)  cumulative earnings 
A)  deductions 
B)  payment 
C)  earnings 
D)  cumulative earnings

Question 12

The journal entry used to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

Accepted Answer

A)  debit Accounts Payable; credit Notes Payable 
B)  debit Cash; credit Notes Payable 
C)  debit Notes Payable; credit Cash 
D)  debit Cash and Interest Expense; credit Notes Payable 
A)  debit Accounts Payable; credit Notes Payable 
B)  debit Cash; credit Notes Payable 
C)  debit Notes Payable; credit Cash 
D)  debit Cash and Interest Expense; credit Notes Payable

Question 13

The summary of the payroll for the monthly pay period ending July 15 indicated the following: $$\begin{array} { l l } 
\text { Sales salaries } & \$ 125,000 \
\text { Federal income tax withheld } & 32,300 \
\text { Office salaries } & 35,000 \
\text { Medical insurance withheld } & 7,370 \
\text { Social security tax withheld } & 10,200 \
\text { Medicare tax withheld } & 2,550
\end{array}$$ Journalize the entries to record a) the payroll and b) the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment taxes.

Accepted Answer

a)Sales Salaries Expense125,000
Office S

Question 14

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

Accepted Answer

A) True 
 B)False

Question 15

Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee's federal income taxes.

Accepted Answer

A) True 
 B)False

Question 16

Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay

Accepted Answer

A)  $53,000 
B)  $50,500 
C)  $50,000 
D)  $49,500 
A)  $53,000 
B)  $50,500 
C)  $50,000 
D)  $49,500

Question 17

A borrower has two alternatives for a loan: a) issue a $480,000, 60-day, 8% note or 2) issue a $480,000, 60-day note that the creditor discounts at 8%. Assume a 360-day year is used for interest calculations.)a) Calculate the amount of the interest expense for each option.
b) Determine the proceeds received by the borrower in each situation.

Accepted Answer

a)$480,000 × 8% × 60/360 = $6,

Question 18

Current liabilities are due

Accepted Answer

A)  but not receivable for more than one year 
B)  but not payable for more than one year 
C)  and receivable within one year 
D)  and payable within one year 
A)  but not receivable for more than one year 
B)  but not payable for more than one year 
C)  and receivable within one year 
D)  and payable within one year

Question 19

Estimating and recording product warranty expense in the period of the sale best follows the

Accepted Answer

A)  cost concept 
B)  business entity concept 
C)  matching concept 
D)  materiality concept 
A)  cost concept 
B)  business entity concept 
C)  matching concept 
D)  materiality concept

Question 20

The total net pay for a period is determined from the payroll register.

Accepted Answer

A) True 
 B)False

Exam 10: Current Liabilities and Payroll

Which of the following is the most desirable quick ratio?

The following totals for the month of April were taken from the payroll register of Magnum Company: Salaries \ 10,000 FICA taxes withheld 750 Income taxes withheld 2,000 Medical insurance deductions 450 Unemployment taxes 420 The entry to record accrual of employer's payroll taxes would include a

The Crafter Company has the following assets and liabilities: ASSETS Cash \ 28,000 Accounts receivable 15,000 Inventory 20,000 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).

Quick assets include

During May, Blast sold 650 portable CD players for $50 each and provided a one-year warranty with each unit. Each CD player cost Blast $25 to produce. If 10% of the goods sold typically need to be replaced over the warranty period, for what amount should Blast debit Product Warranty Expense in May?

Federal unemployment taxes are paid by the employer and the employee.

The employee's earnings record would contain which data that the payroll register would probably not contain?

The journal entry used to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee's federal income taxes.

Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay

Current liabilities are due

Estimating and recording product warranty expense in the period of the sale best follows the

The total net pay for a period is determined from the payroll register.

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

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