Question 1

The current ratio 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 2

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

Accepted Answer

A)  FICA tax 
B)  Federal income tax 
C)  Federal unemployment tax 
D)  State unemployment tax 
A)  FICA tax 
B)  Federal income tax 
C)  Federal unemployment tax 
D)  State unemployment tax

Question 3

With an interest-bearing note, the amount of assets received upon issuance of the note is generally

Accepted Answer

A)  equal to the note's face value. 
B)  greater than the note's face value. 
C)  less than the note's face value. 
D)  equal to the note's maturity value. 
A)  equal to the note's face value. 
B)  greater than the note's face value. 
C)  less than the note's face value. 
D)  equal to the note's maturity value.

Question 4

A company receives $132, of which $12 is for sales tax. The journal entry to record the sale would include a

Accepted Answer

A)  debit to Sales Tax Expense for $12. 
B)  credit to Sales Tax Payable for $12. 
C)  debit to Sales for $132. 
D)  debit to Cash for $120. 
A)  debit to Sales Tax Expense for $12. 
B)  credit to Sales Tax Payable for $12. 
C)  debit to Sales for $132. 
D)  debit to Cash for $120.

Question 5

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

Accepted Answer

A) True 
 B)False

Question 6

The following totals for the month of June were taken from the payroll register of Ford Company.   The entry to record the accrual of federal unemployment taxes would include a

Accepted Answer

A)  credit to Federal Unemployment Taxes Payable for $160. 
B)  credit to Federal Unemployment Taxes Expense for $160. 
C)  credit to Payroll Tax Expense for $160. 
D)  debit to Federal Unemployment Taxes Payable for $160. 
A)  credit to Federal Unemployment Taxes Payable for $160. 
B)  credit to Federal Unemployment Taxes Expense for $160. 
C)  credit to Payroll Tax Expense for $160. 
D)  debit to Federal Unemployment Taxes Payable for $160.

Question 7

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

Accepted Answer

A) True 
 B)False

Question 8

Kaiser Coat Company, which prepares annual financial statements, is preparing adjusting entries on December 31. Analysis indicates the following:
1. The company is the defendant in an employee discrimination lawsuit involving $50,000 of damages. Legal counsel believes it is unlikely that the company will have to pay any damages.
2. December 31st is a Friday. The employees of the company have been paid on Monday, December 27th for the previous week which ended on Friday, December 24th. The company employs 30 people who earn $100 per day and 15 people who earn $150 per day. All employees work 5-day weeks.
3. The company is a defendant in a $500,000 product liability lawsuit. Legal counsel believes the company probably will have to pay the amount requested.
4. Employees are entitled to one day's vacation for each month worked. All employees described above in (2.) worked the month of December.
Instructions
Prepare any adjusting entries necessary at the end of the year.

Accepted Answer

The answer of Kaiser Coat Company, which prepares annual financial...

Question 9

Crawford Company has total proceeds (before segregation of sales taxes) from sales of $4,770. If the sales tax is 6%, the amount to be credited to the account Sales is:

Accepted Answer

A)  $4,770. 
B)  $4,484. 
C)  $5,056. 
D)  $4,500. 
A)  $4,770. 
B)  $4,484. 
C)  $5,056. 
D)  $4,500.

Question 10

The payroll is paid by the

Accepted Answer

A)  personnel department. 
B)  payroll department. 
C)  cashier. 
D)  treasurer's department. 
A)  personnel department. 
B)  payroll department. 
C)  cashier. 
D)  treasurer's department.

Question 11

A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency?

Accepted Answer

A)  $180,000 
B)  $189,000 
C)  $9,450 
D)  $9,000 
A)  $180,000 
B)  $189,000 
C)  $9,450 
D)  $9,000

Question 12

Madden Electric began operations in 2010 and provides a one year warranty on the products it sells. They estimate that 10,000 of the 200,000 units sold in 2010 will be returned for repairs and that these repairs will cost $6 per unit. The cost of repairing 8,000 units presented for service in 2010 was $48,000. Madden should report

Accepted Answer

A)  warranty expense of $12,000 for 2010. 
B)  warranty expense of $60,000 for 2010. 
C)  estimated warranty liability of $60,000 on December 31, 2010. 
D)  no warranty obligation on December 31, 2010, since this is only a contingent liability. 
A)  warranty expense of $12,000 for 2010. 
B)  warranty expense of $60,000 for 2010. 
C)  estimated warranty liability of $60,000 on December 31, 2010. 
D)  no warranty obligation on December 31, 2010, since this is only a contingent liability.

Question 13

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 14

Admire County Bank agrees to lend Givens Brick Company $200,000 on January 1. Givens Brick Company signs a $200,000, 8%, 9-month note. What is the adjusting entry required if Givens Brick Company prepares financial statements on June 30?

Accepted Answer

The answer of Admire County Bank agrees to lend Givens...

Question 15

Liabilities are classified on the balance sheet as current or

Accepted Answer

A)  deferred. 
B)  unearned. 
C)  long-term. 
D)  accrued. 
A)  deferred. 
B)  unearned. 
C)  long-term. 
D)  accrued.

Question 16

Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Advances from customers are classified as a(n)

Accepted Answer

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

Question 19

Assume that the payroll records of Darby Oil Company provided the following information for the weekly payroll ended November 30, 2010.
Additional information: All employees are paid overtime at time and a half for hours worked in excess of 40 per week. The FICA tax rate is 8% for the first $100,000 of each employee's annual earnings. The employer pays unemployment taxes of 6.2% (5.4% for state and .8% for federal) on the first $7,000 of each employee's annual earnings.
Instructions
(a) Prepare the payroll register for the pay period.
(b) Prepare general journal entries to record the payroll and payroll taxes.

Accepted Answer

The answer of Assume that the payroll records of Darby...

Question 20

Lincoln Company sells 600 units of a product that has a one-year warranty on parts. The average cost of honoring one warranty contract is $50. During the year 30 contracts are honored at a cost of $1,500. It is estimated that 60 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 Estimated Warranty Liability for $3,000. 
B)  credit to Estimated Warranty Liability for $4,500. 
C)  debit to Warranty Expense for $1,500. 
D)  debit to Warranty Expense for $4,500. 
A)  credit to Estimated Warranty Liability for $3,000. 
B)  credit to Estimated Warranty Liability for $4,500. 
C)  debit to Warranty Expense for $1,500. 
D)  debit to Warranty Expense for $4,500.

Exam 11: Current Liabilities and Payroll Accounting

The current ratio is

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

With an interest-bearing note, the amount of assets received upon issuance of the note is generally

A company receives $132, of which $12 is for sales tax. The journal entry to record the sale would include a

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

The following totals for the month of June were taken from the payroll register of Ford Company. The entry to record the accrual of federal unemployment taxes would include a

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

Crawford Company has total proceeds (before segregation of sales taxes) from sales of $4,770. If the sales tax is 6%, the amount to be credited to the account Sales is:

The payroll is paid by the

A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency?

Sales taxes collected by a retailer are expenses

Admire County Bank agrees to lend Givens Brick Company $200,000 on January 1. Givens Brick Company signs a $200,000, 8%, 9-month note. What is the adjusting entry required if Givens Brick Company prepares financial statements on June 30?

Liabilities are classified on the balance sheet as current or

Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet.

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

Advances from customers are classified as a(n)

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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