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

The journal entry to record the payroll for a period will include a credit to Wages and Salaries Payable for the gross

Accepted Answer

A)  amount less all payroll deductions. 
B)  amount of all paychecks issued. 
C)  pay less taxes payable. 
D)  pay less voluntary deductions. 
A)  amount less all payroll deductions. 
B)  amount of all paychecks issued. 
C)  pay less taxes payable. 
D)  pay less voluntary deductions.

Question 3

On September 1, Joe's Painting Service borrows $50,000 from National Bank on a 4-month, $50,000, 6% note. The entry by Joe's Painting Service to record payment of the note and accrued interest on January 1 is

Accepted Answer

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

Question 4

Most companies pay current liabilities

Accepted Answer

A)  out of current assets. 
B)  by issuing interest-bearing notes payable. 
C)  by issuing stock. 
D)  by creating long-term liabilities. 
A)  out of current assets. 
B)  by issuing interest-bearing notes payable. 
C)  by issuing stock. 
D)  by creating long-term liabilities.

Question 5

English Company billed its customers a total of $1,575,000 for the month of November. The total includes a 5% state sales tax.
Instructions
(a) Determine the proper amount of revenue to report for the month.
(b) Prepare the general journal entry to record the revenue and related liabilities for the month.

Accepted Answer

(a) $1,575,000 ÷ 1.05 = $1,500

Question 6

A current liability is a debt that can reasonably be expected to be paid

Accepted Answer

A)  within one year. 
B)  between 6 months and 18 months. 
C)  out of currently recognized revenues. 
D)  out of cash currently on hand. 
A)  within one year. 
B)  between 6 months and 18 months. 
C)  out of currently recognized revenues. 
D)  out of cash currently on hand.

Question 7

With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

Accepted Answer

A) True 
 B)False

Question 8

FICA taxes are a voluntary deduction from employee earnings.

Accepted Answer

A) True 
 B)False

Question 9

On August 1, 2010, 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, 2011. How will the note payable and the related interest be classified in the December 31, 2010, balance sheet?

Accepted Answer

The answer of On August 1, 2010, a company borrowed...

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

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 12

If a liability is dependent on a future event, it is called a

Accepted Answer

A)  potential liability. 
B)  hypothetical liability. 
C)  probabilistic liability. 
D)  contingent liability. 
A)  potential liability. 
B)  hypothetical liability. 
C)  probabilistic liability. 
D)  contingent liability.

Question 13

Metropolitan Symphony sells 200 season tickets for $60,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $24,000.

Accepted Answer

A) True 
 B)False

Question 14

The employer incurs a payroll tax expense equal to the amount contributed by each employee for ______________ taxes.

Accepted Answer

The answer of The employer incurs a payroll tax expense...

Question 15

Any balance in an unearned revenue account is reported as a(n)

Accepted Answer

A)  current liability. 
B)  long-term debt. 
C)  revenue. 
D)  unearned liability. 
A)  current liability. 
B)  long-term debt. 
C)  revenue. 
D)  unearned liability.

Question 16

Ann Ellis's regular rate of pay is $12 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)  $576. 
B)  $480. 
C)  $624. 
D)  $864. 
A)  $576. 
B)  $480. 
C)  $624. 
D)  $864.

Question 17

A current liability is a debt the company reasonably expects to pay from existing current assets within

Accepted Answer

A)  one year. 
B)  the operating cycle. 
C)  one year or the operating cycle, whichever is longer. 
D)  one year or the operating cycle, whichever is shorter. 
A)  one year. 
B)  the operating cycle. 
C)  one year or the operating cycle, whichever is longer. 
D)  one year or the operating cycle, whichever is shorter.

Question 18

On October 1, 2010, Pennington Company issued a $40,000, 10%, nine-month interest-bearing note. If the Pennington Company is preparing financial statements at December 31, 2010, the adjusting entry for accrued interest will include a:

Accepted Answer

A)  credit to Notes Payable of $1,000. 
B)  debit to Interest Expense of $1,000 
C)  credit to Interest Payable of $2,000. 
D)  debit to Interest Expense of $1,500. 
A)  credit to Notes Payable of $1,000. 
B)  debit to Interest Expense of $1,000 
C)  credit to Interest Payable of $2,000. 
D)  debit to Interest Expense of $1,500.

Question 19

Identify which of the following would be classified as current liabilities as of December 31, 2010:
1. Wages Payable
2. Bonds Payable, maturing in 2015
3. Interest Payable, due July 1, 2011
4. Taxes Payable
5. Notes Payable, due January 30, 2012

Accepted Answer

Current liabilities

Question 20

The amount of sales tax collected by a retail store when making sales is

Accepted Answer

A)  a miscellaneous revenue for the store. 
B)  a current liability. 
C)  not recorded because it is a tax paid by the customer. 
D)  recorded as an operating expense. 
A)  a miscellaneous revenue for the store. 
B)  a current liability. 
C)  not recorded because it is a tax paid by the customer. 
D)  recorded as an operating expense.

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

The journal entry to record the payroll for a period will include a credit to Wages and Salaries Payable for the gross

On September 1, Joe's Painting Service borrows $50,000 from National Bank on a 4-month, $50,000, 6% note. The entry by Joe's Painting Service to record payment of the note and accrued interest on January 1 is

Most companies pay current liabilities

A current liability is a debt that can reasonably be expected to be paid

With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

FICA taxes are a voluntary deduction from employee earnings.

On August 1, 2010, 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, 2011. How will the note payable and the related interest be classified in the December 31, 2010, balance sheet?

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

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

If a liability is dependent on a future event, it is called a

Metropolitan Symphony sells 200 season tickets for $60,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $24,000.

The employer incurs a payroll tax expense equal to the amount contributed by each employee for ______________ taxes.

Any balance in an unearned revenue account is reported as a(n)

Ann Ellis's regular rate of pay is $12 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

A current liability is a debt the company reasonably expects to pay from existing current assets within

On October 1, 2010, Pennington Company issued a $40,000, 10%, nine-month interest-bearing note. If the Pennington Company is preparing financial statements at December 31, 2010, the adjusting entry for accrued interest will include a:

Identify which of the following would be classified as current liabilities as of December 31, 2010: 1. Wages Payable 2. Bonds Payable, maturing in 2015 3. Interest Payable, due July 1, 2011 4. Taxes Payable 5. Notes Payable, due January 30, 2012

The amount of sales tax collected by a retail store when making sales is

Accounting in Action

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Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

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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

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