Question 1

The paid absence that is most commonly accrued is

Accepted Answer

A)  voting leave. 
B)  vacation time. 
C)  maternity leave. 
D)  disability leave. 
A)  voting leave. 
B)  vacation time. 
C)  maternity leave. 
D)  disability leave.

Question 2

During the month a company sells goods for a total of $54000 which includes sales taxes of $4000; therefore the company should recognize $50000 in Sales Revenues and $4000 in Sales Tax Expense.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are reported as current liabilities except

Accepted Answer

A)  accounts payable. 
B)  bonds payable. 
C)  notes payable. 
D)  unearned revenues. 
A)  accounts payable. 
B)  bonds payable. 
C)  notes payable. 
D)  unearned revenues.

Question 4

The following totals for the month of June were taken from the payroll register of Parks Company. $$\begin{array} { l r } 
\text { Salaries and wages } & \$ 80,000 \
\text { FICA taxes withheld } & 6,132 \
\text { Income taxes withheld } & 17,600 \
\text { Medical insurance deductions } & 3,200 \
\text { Federal unemployment taxes } & 640 \
\text { State unemployment taxes } & 4,000
\end{array}$$ The entry to record accrual of Parks's Company's payroll taxes would include a

Accepted Answer

A)  debit to Payroll Tax Expense for $10772 
B)  credit to Payroll Tax Expense for $10772 
C)  credit to FICA Taxes Payable for $4640. 
D)  credit to Payroll Tax Expense for $4640. 
A)  debit to Payroll Tax Expense for $10772 
B)  credit to Payroll Tax Expense for $10772 
C)  credit to FICA Taxes Payable for $4640. 
D)  credit to Payroll Tax Expense for $4640.

Question 5

The journal entry to record the payroll for Fox-Gardiner Company for the week ending January 8 would probably include a

Accepted Answer

A)  credit to Salaries Expense. 
B)  credit to Wages Expense. 
C)  debit to Federal Income Taxes Payable. 
D)  credit to FICA Taxes Payable. 
A)  credit to Salaries Expense. 
B)  credit to Wages Expense. 
C)  debit to Federal Income Taxes Payable. 
D)  credit to FICA Taxes Payable.

Question 6

On August 1 2016 a company borrowed cash and signed a one-year interest-bearing note on which both the face value and interest are payable on August 1 2017. How will the note payable and the related interest be classified in the December 31 2016 balance sheet? $\begin{array}{cc}
&&\text { Note Payable } &&&& \text { Interest Payable } \\end{array}$
A)$\begin{array}{ll}\text { Current liability } &&& \text { Noncurrent liability } \\end{array}$
B)$\begin{array}{ll}\text { Noncurrent liability } & \text { Current liability } \\end{array}$
C)$\begin{array}{ll}\text { Current liability } &&& \text { Current liability } \\end{array}$
D)$\begin{array}{ll}\text { Noncurrent liability } && \text { Not shown }
\end{array}$

Accepted Answer

The answer of On August 1 2016 a company borrowed...

Question 7

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

Accepted Answer

A) True 
 B)False

Question 8

Phaedra Hise had earned (accumulated) salary of $110000 through November 30. Her December salary amounted to $9800. Richard Tangard began employment on December 1 and will be paid his first month's salary of $7000 on December 31. Income tax withholding for December for each employee is as follows:
The following payroll tax rates are applicable: $\begin{array}{ll}
\text { FICA tax on first } \$ 117,000 & 7.65 \%(1.45 \% \text { over } 117,000) \
\text { FUTA tax on first } \$ 7,000 & 6.2 \%^{*} \
\text { SUTA tax on first } \$ 7,000 & 5.4 \%
\end{array}$
 *Less a credit equal to the state unemployment contribution
Instructions
Record the payroll for the two employees at December 31 and record the employer's share of payroll tax expense for the December 31 payroll.

Accepted Answer

The answer of Phaedra Hise had earned (accumulated) salary of...

Question 9

In most companies current liabilities are paid within

Accepted Answer

A)  one year through the creation of other current liabilities. 
B)  the operating cycle through the creation of other current liabilities. 
C)  one year or the operating cycle out of current assets. 
D)  the operating cycle out of current assets. 
A)  one year through the creation of other current liabilities. 
B)  the operating cycle through the creation of other current liabilities. 
C)  one year or the operating cycle out of current assets. 
D)  the operating cycle out of current assets.

Question 10

Borowitz Company maintains two separate accounts payable computer systems. One is known to all the users and is used to process payments to vendors. Employees enter the vendor code or the name and address of new vendors the amount the account and so on. The other system is a secret one. It is used to cross-check the vendors against an approved vendor list. If a vendor is not listed as approved the payment process is halted. Internal audit employees seek to verify the existence of a bona fide claim by the vendor. All inquiries are made at the top management level and very discreetly. No one but top management the internal audit staff and the Board of Directors of the company is even aware of the second system.
Required:
Is it ethical for a company to have a secret system like the one described? Explain.

Accepted Answer

Secret systems that seek to verify the i

Question 11

In a given year total warranty expense is the sum of actual warranty costs incurred on units sold plus the estimated cost of servicing those units in the future.

Accepted Answer

A) True 
 B)False

Question 12

Employer payroll taxes include all of the following except

Accepted Answer

A)  FICA taxes. 
B)  federal unemployment taxes. 
C)  state unemployment taxes. 
D)  federal income taxes. 
A)  FICA taxes. 
B)  federal unemployment taxes. 
C)  state unemployment taxes. 
D)  federal income taxes.

Question 13

When a company gives employees rights to receive compensation for absences and the payment for such absences is probable and the amount can be reasonably estimated the company should accrue a liability.

Accepted Answer

A) True 
 B)False

Question 14

Based on the following information compute the (1) current ratio and (2) working capital. $\begin{array} { l r } 
\text { Current assets } & \$ 200,000 \
\text { Total assets } & 900,000 \
\text { Current liabilities } & 80,000 \
\text { Total liabilities } & 500,000
\end{array}$

Accepted Answer

(1) Curren

Question 15

Sales taxes collected by the retailer are recorded as a(n)

Accepted Answer

A)  revenue. 
B)  liability. 
C)  expense. 
D)  asset. 
A)  revenue. 
B)  liability. 
C)  expense. 
D)  asset.

Question 16

A retail store does not segregate sales and the amount of sales tax on sales. If the sales tax rate is 5% and the register total amounted to $262500 what is the amount of the sales taxes owed to the taxing agency?

Accepted Answer

A)  $250000 
B)  $262500 
C)  $13125 
D)  $12500 
A)  $250000 
B)  $262500 
C)  $13125 
D)  $12500

Question 17

On December 1 Cypress Grove Company introduces a new product that includes a one-year warranty on parts. In December 500 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $60 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost.

Accepted Answer

None

Question 18

Selected data from a February payroll register for Ginn Company are presented below. Some amounts are intentionally omitted. $\begin{array}{lclc}
\text { Gross earnings: }\
\text { Regular } & \$ 22,200 & \text { State income taxes } & \$(3) \
\text { Overtime } & \underline{ (1) }& \text { Union dues } & \underline{ 200} \
\text { Total } & (2) & \text { Total deductions } & (4)
\end{array}$

$\begin{array}{lrlr}
\text { Deductions: } & & \text { Net pay } & \$ 19,931 \
\text { FICA taxes } & \$ 1,989 & \text { Accounts debited: } \
\text { Federal income taxes } & 2,840 & \text { Salarieshages expense } & (5)
\end{array}$ FICA taxes are 7.65%. State income taxes are 4% of gross earnings.
Instructions
(a) Fill in the missing amounts.
(b) Journalize the February payroll and the payment of the payroll.

Accepted Answer

(a) (1) @#LAT-DLM& see (2) below @#LAT-DLM&
(2) @#LAT-DLM& (FICA taxes

Question 19

The employer incurs a payroll tax expense equal to the amount withheld from the employees' wages for federal income taxes.

Accepted Answer

A) True 
 B)False

Question 20

Unearned revenues should be classified as Other Revenues and Gains on the Income Statement.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

The paid absence that is most commonly accrued is

During the month a company sells goods for a total of $54000 which includes sales taxes of $4000; therefore the company should recognize $50000 in Sales Revenues and $4000 in Sales Tax Expense.

All of the following are reported as current liabilities except

The journal entry to record the payroll for Fox-Gardiner Company for the week ending January 8 would probably include a

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

In most companies current liabilities are paid within

In a given year total warranty expense is the sum of actual warranty costs incurred on units sold plus the estimated cost of servicing those units in the future.

Employer payroll taxes include all of the following except

When a company gives employees rights to receive compensation for absences and the payment for such absences is probable and the amount can be reasonably estimated the company should accrue a liability.

Based on the following information compute the (1) current ratio and (2) working capital. Current assets \ 200,000 Total assets 900,000 Current liabilities 80,000 Total liabilities 500,000

Sales taxes collected by the retailer are recorded as a(n)

A retail store does not segregate sales and the amount of sales tax on sales. If the sales tax rate is 5% and the register total amounted to $262500 what is the amount of the sales taxes owed to the taxing agency?

The employer incurs a payroll tax expense equal to the amount withheld from the employees' wages for federal income taxes.

Unearned revenues should be classified as Other Revenues and Gains on the Income Statement.

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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