Question 1

If a contingent liability is reasonably estimable and it is reasonably possible that the contingency will occur the contingent liability

Accepted Answer

A)  should be recorded in the accounts. 
B)  should be disclosed in the notes accompanying the financial statements. 
C)  should not be recorded or disclosed in the notes until the contingency actually happens. 
D)  must be paid for the amount estimated. 
A)  should be recorded in the accounts. 
B)  should be disclosed in the notes accompanying the financial statements. 
C)  should not be recorded or disclosed in the notes until the contingency actually happens. 
D)  must be paid for the amount estimated.

Question 2

Smita Quinn earns $30 per hour for a 40 hour work week and $45 per hour for overtime work. If Smita works 44 hours her gross earnings are:

Accepted Answer

A)  $1320. 
B)  $1380. 
C)  $1568. 
D)  $1980. 
A)  $1320. 
B)  $1380. 
C)  $1568. 
D)  $1980.

Question 3

Payroll activities involve three functions: hiring employees preparing the payroll and paying the payroll.

Accepted Answer

A) True 
 B)False

Question 4

Working capital is

Accepted Answer

A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities. 
A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities.

Question 5

Current liabilities generally appear

Accepted Answer

A)  after long-term debt on the balance sheet. 
B)  in decreasing order of magnitude on the balance sheet. 
C)  in order of maturity on the balance sheet. 
D)  in increasing order of magnitude on the balance sheet. 
A)  after long-term debt on the balance sheet. 
B)  in decreasing order of magnitude on the balance sheet. 
C)  in order of maturity on the balance sheet. 
D)  in increasing order of magnitude on the balance sheet.

Question 6

Contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur.

Accepted Answer

A) True 
 B)False

Question 7

Sales taxes collected by a retailer are expenses

Accepted Answer

A)  of the retailer. 
B)  of the customers. 
C)  of the government. 
D)  that are not recognized by the retailer until they are submitted to the government. 
A)  of the retailer. 
B)  of the customers. 
C)  of the government. 
D)  that are not recognized by the retailer until they are submitted to the government.

Question 8

Ishee Company does not segregate sales and sales taxes on its cash register. Its register total for the month is $291500 which includes a 6% sales tax.
Instructions
Compute sales taxes payable and make the entry to record sales and sales taxes payable.

Accepted Answer

None

Question 9

On January 1 2017 Mazzeo Company a calendar-year company issued $1600000 of notes payable of which $400000 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 $1600000. 
B)  Long-term Debt $1600000. 
C)  Current Liabilities $800000; Long-term Debt $800000. 
D)  Current Liabilities $400000; Long-term Debt $1200000. 
A)  Current Liabilities $1600000. 
B)  Long-term Debt $1600000. 
C)  Current Liabilities $800000; Long-term Debt $800000. 
D)  Current Liabilities $400000; Long-term Debt $1200000.

Question 10

The following payroll liability accounts are included in the ledger of Devito Company on January 1 2017: $\begin{array}{lr}
\text { FICA Taxes Payable } & \$ 1,750 \
\text { Federal Income Taxes Payable } & 4,000 \
\text { State Income Taxes Payable } & 665 \
\text { Federal Unemployment Taxes Payable } & 175 \
\text { State Unemployment Taxes Payable } & 1,190 \
\text { Union Dues Payable } & 400 \
\text { Health Insurance Payable } & 5,000 \
\text { U.S. Savings Bonds Payable } & 1,500
\end{array}$ In January the following transactions occurred:
Jan. 9 Sent a check for $5000 to Blue Cross and Blue Shield.
11 Deposited a check for $5750 in Federal Reserve Bank for FICA taxes and federal income taxes withheld.
14 Sent a check for $400 to the union treasurer for union dues.
18 Paid state income taxes withheld from employees.
21 Paid state and federal unemployment taxes.
22 Purchased U.S. Savings Bonds for employees by writing a check for $1500.
Instructions
Journalize the January transactions

Accepted Answer

The answer of The following payroll liability accounts are included...

Question 11

The accounting for warranty costs is based on the

Accepted Answer

A)  going concern principle. 
B)  expense recognition principle. 
C)  conservatism concept. 
D)  historical cost principle. 
A)  going concern principle. 
B)  expense recognition principle. 
C)  conservatism concept. 
D)  historical cost principle.

Question 12

Autotether Inc. sells 1200 units of a product that has a one-year warranty on parts. The average cost of honoring one warranty contract is $60. During the year 60 contracts are honored at a cost of $3600. It is estimated that 120 contracts will be honored in the following year. The adjusting entry at the end of the current year will include a

Accepted Answer

A)  credit to Warranty Liability for $7200. 
B)  credit to Warranty Liability for $10800. 
C)  debit to Warranty Expense for $3600. 
D)  debit to Warranty Expense for $10800. 
A)  credit to Warranty Liability for $7200. 
B)  credit to Warranty Liability for $10800. 
C)  debit to Warranty Expense for $3600. 
D)  debit to Warranty Expense for $10800.

Question 13

Which of the following statements concerning current liabilities is incorrect?

Accepted Answer

A)  Current liabilities include unearned revenues. 
B)  A company that has more current liabilities than current assets is usually the subject of some concern. 
C)  Current liabilities include prepaid expenses. 
D)  A current liability is a debt that can reasonably be expected to be paid out of existing current assets or result in the creation of other current liabilities. 
A)  Current liabilities include unearned revenues. 
B)  A company that has more current liabilities than current assets is usually the subject of some concern. 
C)  Current liabilities include prepaid expenses. 
D)  A current liability is a debt that can reasonably be expected to be paid out of existing current assets or result in the creation of other current liabilities.

Question 14

On September 1 Bud's Painting Service borrows $150000 from Highlands Bank on a 4-month $150000 6% note. What entry must Bud's Painting Service make on December 31 before financial statements are prepared? a. 
$\begin{array}{lrr}
  \text { Interest Payable } &3,000\
 \text { Interest Expense  } &&3,000\
\end{array}$

b.
$\begin{array}{lrr}
  \text {  Interest Expense } &9,000\
 \text {Interest Payable  } &&9,000\
\end{array}$

c.
$\begin{array}{lrr}
  \text {  Interest Expense } &3,000\
 \text { Interest Payable } &&3,000\
\end{array}$

d. 
$\begin{array}{lrr}
  \text {  Interest Expense } &3,000\
 \text {  Notes Payable } &&3,000\
\end{array}$

Accepted Answer

The answer of On September 1 Bud's Painting Service borrows...

Question 15

FICA Taxes Payable was credited for $27000 in the entry when Highlands Company recorded payroll. When Highlands Company records employer's payroll taxes FICA Taxes Payable should be credited for:

Accepted Answer

A)  $0. 
B)  $27000. 
C)  $54000. 
D)  some other amount. 
A)  $0. 
B)  $27000. 
C)  $54000. 
D)  some other amount.

Question 16

A contingent liability need only be disclosed in the financial statement notes when the likelihood of the contingency is

Accepted Answer

A)  reasonably possible. 
B)  probable. 
C)  remote. 
D)  unlikely. 
A)  reasonably possible. 
B)  probable. 
C)  remote. 
D)  unlikely.

Question 17

A contingent liability is recorded when the likelihood of the contingency is

Accepted Answer

A)  remote. 
B)  reasonably possible. 
C)  probable. 
D)  nil or zero. 
A)  remote. 
B)  reasonably possible. 
C)  probable. 
D)  nil or zero.

Question 18

Under IFRS contingent liabilities are

Accepted Answer

A)  recorded in the financial statements. 
B)  disclosed if certain criteria are met. 
C)  always disclosed in the financial statements. 
D)  accounted for in the same way as under GAAP. 
A)  recorded in the financial statements. 
B)  disclosed if certain criteria are met. 
C)  always disclosed in the financial statements. 
D)  accounted for in the same way as under GAAP.

Question 19

In March gross earnings of Perlman Company totaled $250000. All earnings are subject to 7.65% FICA taxes 5.4% state unemployment taxes and 0.8% federal unemployment taxes.
Instructions
(a) Compute the employer's payroll tax expense.
(b) Prepare the entry to record payroll taxes.

Accepted Answer

(a) Payrol

Question 20

Sarah Jones's regular rate of pay is $30 per hour with one and one-half times her regular rate for any hours which exceed 40 hours per week. She worked 48 hours last week. Therefore her gross wages were

Accepted Answer

A)  $1440. 
B)  $1200. 
C)  $1560. 
D)  $2160. 
A)  $1440. 
B)  $1200. 
C)  $1560. 
D)  $2160.

Exam 11: Current Liabilities and Payroll Accounting

If a contingent liability is reasonably estimable and it is reasonably possible that the contingency will occur the contingent liability

Smita Quinn earns $30 per hour for a 40 hour work week and $45 per hour for overtime work. If Smita works 44 hours her gross earnings are:

Payroll activities involve three functions: hiring employees preparing the payroll and paying the payroll.

Working capital is

Current liabilities generally appear

Contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur.

Sales taxes collected by a retailer are expenses

Ishee Company does not segregate sales and sales taxes on its cash register. Its register total for the month is $291500 which includes a 6% sales tax. Instructions Compute sales taxes payable and make the entry to record sales and sales taxes payable.

On January 1 2017 Mazzeo Company a calendar-year company issued $1600000 of notes payable of which $400000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31 2017 is

The accounting for warranty costs is based on the

Which of the following statements concerning current liabilities is incorrect?

FICA Taxes Payable was credited for $27000 in the entry when Highlands Company recorded payroll. When Highlands Company records employer's payroll taxes FICA Taxes Payable should be credited for:

A contingent liability need only be disclosed in the financial statement notes when the likelihood of the contingency is

A contingent liability is recorded when the likelihood of the contingency is

Under IFRS contingent liabilities are

In March gross earnings of Perlman Company totaled $250000. All earnings are subject to 7.65% FICA taxes 5.4% state unemployment taxes and 0.8% federal unemployment taxes. Instructions (a) Compute the employer's payroll tax expense. (b) Prepare the entry to record payroll taxes.

Sarah Jones's regular rate of pay is $30 per hour with one and one-half times her regular rate for any hours which exceed 40 hours per week. She worked 48 hours last week. Therefore her gross wages were

Accounting in Action

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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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