Question 1

IFRS and GAAP are similar for each of the following except for the

Accepted Answer

A)  accounting for contingent liabilities. 
B)  definition of a liability. 
C)  accounting for payroll taxes payable. 
D)  None of these answers are correct. 
A)  accounting for contingent liabilities. 
B)  definition of a liability. 
C)  accounting for payroll taxes payable. 
D)  None of these answers are correct.

Question 2

The objectives of internal accounting control for payrolls are (a) to safeguard company assets from unauthorized payments of payrolls and (b) to assure accuracy and reliability of the accounting records pertaining to payroll.

Accepted Answer

A) True 
 B)False

Question 3

LaCrema Company publishes a monthly decorating magazine Remodelista. Subscriptions to the magazine cost $25 per year. During October 2016 LaCrema sells 18000 subscriptions beginning with the November issue. LaCrema prepares financial statements quarterly and recognizes subscription revenue earned at the end of the quarter. The company uses the accounts Unearned Subscriptions and Subscription Revenue.
Instructions
(a) Prepare the entry in October for the receipt of the subscriptions.
(b) Prepare the adjusting entry at December 31 2016 to record subscription revenue earned in December 2016.
(c) Prepare the adjusting entry at March 31 2017 to record subscription revenue earned in the first quarter of 2017.

Accepted Answer

None

Question 4

Which of the following items would not be identified if a contingent liability were disclosed in a financial statement footnote?

Accepted Answer

A)  The nature of the item 
B)  The expected outcome of the future event 
C)  A numerical probability of the expected loss 
D)  The amount of the contingency if known 
A)  The nature of the item 
B)  The expected outcome of the future event 
C)  A numerical probability of the expected loss 
D)  The amount of the contingency if known

Question 5

The amount of income taxes withheld from employees is dependent on each of the following except the

Accepted Answer

A)  employee's gross earnings. 
B)  employee's net pay. 
C)  length of the pay period. 
D)  number of allowances claimed by the employee. 
A)  employee's gross earnings. 
B)  employee's net pay. 
C)  length of the pay period. 
D)  number of allowances claimed by the employee.

Question 6

Sweet Baking Company sells professional grade mixers for home use. The machines carry a 2-year warranty. Past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is $70 for labor and $90 for parts per unit. During 2017 2500 mixers were sold at an average price of $800. During the year 60 of the machines that were sold were repaired at the average price per unit.
Instructions
(a) Prepare the journal entry to record the repairs made under warranty.
(b) Prepare the journal entry to record the warranty expense for the year.

Accepted Answer

(a)
 (To record estimated cost of honori

Question 7

On March 1 Mena Company borrows $150000 from High Country Bank by signing a 6-month 8% interest-bearing note.
Instructions
Prepare the necessary entries below associated with the note payable on the books of Mena Company.
(a) Prepare the entry on March 1 when the note was issued.
(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made.
(c) Prepare the adjusting entry at August 31 to accrue interest.
(d) Prepare the entry to record payment of the note at maturity.

Accepted Answer

None

Question 8

The following totals for the month of April were taken from the payroll register of Asplend Company. $$\begin{array} { l r } 
\text { Salaries and wages } & \$ 72,000 \
\text { FlCA taxes withheld } & 5,508 \
\text { Income taxes withheld } & 15,000 \
\text { Medical insurance deductions } & 2,700 \
\text { Federal unemployment taxes } & 192 \
\text { State unemployment taxes } & 1,296
\end{array}$$ The entry to record the payment of net payroll would include a

Accepted Answer

A)  debit to Salaries and Wages Payable for $47304. 
B)  debit to Salaries and Wages Payable for $48792. 
C)  debit to Salaries and Wages Payable for $43284. 
D)  credit to Cash for $54300. 
A)  debit to Salaries and Wages Payable for $47304. 
B)  debit to Salaries and Wages Payable for $48792. 
C)  debit to Salaries and Wages Payable for $43284. 
D)  credit to Cash for $54300.

Question 9

Disclosure of a contingent liability is usually made

Accepted Answer

A)  parenthetically in the body of the balance sheet. 
B)  parenthetically in the body of the income statement. 
C)  in a note to the financial statements. 
D)  in the management discussion section of the financial statement. 
A)  parenthetically in the body of the balance sheet. 
B)  parenthetically in the body of the income statement. 
C)  in a note to the financial statements. 
D)  in the management discussion section of the financial statement.

Question 10

A payroll record that accumulates the gross earnings deductions and net pay by employee for each pay period is the

Accepted Answer

A)  withholding tax table. 
B)  employee earnings record. 
C)  payroll register. 
D)  Wage and Tax Statement. 
A)  withholding tax table. 
B)  employee earnings record. 
C)  payroll register. 
D)  Wage and Tax Statement.

Question 11

The current portion of long-term debt should

Accepted Answer

A)  be paid immediately. 
B)  be reclassified as a current liability. 
C)  be classified as a long-term liability. 
D)  not be separated from the long-term portion of debt. 
A)  be paid immediately. 
B)  be reclassified as a current liability. 
C)  be classified as a long-term liability. 
D)  not be separated from the long-term portion of debt.

Question 12

Match the items below by entering the appropriate code letter in the space provided.

Accepted Answer

The answer of Match the items below by entering the...

Question 13

The interest charged on a $400000 note payable at the rate of 8% on a 90-day note would be

Accepted Answer

A)  $32000. 
B)  $17776. 
C)  $8000. 
D)  $2666. 
A)  $32000. 
B)  $17776. 
C)  $8000. 
D)  $2666.

Question 14

The entry to record the proceeds upon issuing an interest-bearing note is a. Interest Expense 
Cash 
Notes Payable

b. Cash 
Notes Payable

c. Notes Payable 
Cash

d. Cash
 Notes Payable
 Interest Payable

Accepted Answer

The answer of The entry to record the proceeds upon...

Question 15

Employee payroll deductions include each of the following except

Accepted Answer

A)  federal unemployment taxes. 
B)  federal income taxes. 
C)  FICA taxes. 
D)  insurance pension plans and union dues. 
A)  federal unemployment taxes. 
B)  federal income taxes. 
C)  FICA taxes. 
D)  insurance pension plans and union dues.

Question 16

Sales taxes collected by a retailer are reported as

Accepted Answer

A)  contingent liabilities. 
B)  revenues. 
C)  expenses. 
D)  current liabilities. 
A)  contingent liabilities. 
B)  revenues. 
C)  expenses. 
D)  current liabilities.

Question 17

Which of the following payroll taxes are usually filed and remitted annually?

Accepted Answer

A)  Federal unemployment taxes 
B)  FICA taxes 
C)  State unemployment taxes 
D)  Federal and state unemployment taxes 
A)  Federal unemployment taxes 
B)  FICA taxes 
C)  State unemployment taxes 
D)  Federal and state unemployment taxes

Question 18

On January 1 2017 Key Company a calendar-year company issued $250000 of notes payable of which $62500 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31 2017 is

Accepted Answer

A)  Current Liabilities $250000. 
B)  Long-term Debt $250000. 
C)  Current Liabilities $62500; Long-term Debt $187500. 
D)  Current Liabilities $187500; Long-term Debt $62500. 
A)  Current Liabilities $250000. 
B)  Long-term Debt $250000. 
C)  Current Liabilities $62500; Long-term Debt $187500. 
D)  Current Liabilities $187500; Long-term Debt $62500.

Question 19

Most notes are not interest bearing.

Accepted Answer

A) True 
 B)False

Question 20

Notes payable usually require the borrower to pay interest.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

IFRS and GAAP are similar for each of the following except for the

The objectives of internal accounting control for payrolls are (a) to safeguard company assets from unauthorized payments of payrolls and (b) to assure accuracy and reliability of the accounting records pertaining to payroll.

Which of the following items would not be identified if a contingent liability were disclosed in a financial statement footnote?

The amount of income taxes withheld from employees is dependent on each of the following except the

Disclosure of a contingent liability is usually made

A payroll record that accumulates the gross earnings deductions and net pay by employee for each pay period is the

The current portion of long-term debt should

Match the items below by entering the appropriate code letter in the space provided.

The interest charged on a $400000 note payable at the rate of 8% on a 90-day note would be

The entry to record the proceeds upon issuing an interest-bearing note is a. Interest Expense Cash Notes Payable b. Cash Notes Payable c. Notes Payable Cash d. Cash Notes Payable Interest Payable

Employee payroll deductions include each of the following except

Sales taxes collected by a retailer are reported as

Which of the following payroll taxes are usually filed and remitted annually?

On January 1 2017 Key Company a calendar-year company issued $250000 of notes payable of which $62500 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31 2017 is

Most notes are not interest bearing.

Notes payable usually require the borrower to pay interest.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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