Question 1

Current maturities of long-term debt

Accepted Answer

A)  require an adjusting entry. 
B)  are optionally reported on the balance sheet. 
C)  can be properly classified during balance sheet preparation, with no adjusting entry required. 
D)  are not considered to be current liabilities. 
A)  require an adjusting entry. 
B)  are optionally reported on the balance sheet. 
C)  can be properly classified during balance sheet preparation, with no adjusting entry required. 
D)  are not considered to be current liabilities.

Question 2

Assuming a FICA tax rate of 8% on the first $100,000 in wages, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $110,000 for the year?

Accepted Answer

A)  $110,000 
B)  $79,200 
C)  $88,000 
D)  $80,000 
A)  $110,000 
B)  $79,200 
C)  $88,000 
D)  $80,000

Question 3

An employer's estimated cost for post-retirement benefits for its employees should be

Accepted Answer

A)  recognized as an expense when paid. 
B)  recognized as an expense during the employees' work years. 
C)  recognized as an expense during the employees' retirement years. 
D)  charged to the goodwill account because providing employees with benefits generates employee goodwill. 
A)  recognized as an expense when paid. 
B)  recognized as an expense during the employees' work years. 
C)  recognized as an expense during the employees' retirement years. 
D)  charged to the goodwill account because providing employees with benefits generates employee goodwill.

Question 4

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 5

Jan Goll has worked 44 hours this week. She worked in excess of 8 hours each day. Her regular hourly wage is $15 per hour. What are Jan's gross wages for the week? (The company Jan works for is in compliance with the Fair Labor Standards Act.)

Accepted Answer

A)  $660 
B)  $690 
C)  $990 
D)  $720 
A)  $660 
B)  $690 
C)  $990 
D)  $720

Question 6

On January 1, 2010, Donahue Company, a calendar-year company, issued $400,000 of notes payable, of which $100,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2010, is

Accepted Answer

A)  Current Liabilities, $400,000. 
B)  Long-term Debt , $400,000. 
C)  Current Liabilities, $100,000; Long-term Debt, $300,000. 
D)  Current Liabilities, $300,000; Long-term Debt, $100,000. 
A)  Current Liabilities, $400,000. 
B)  Long-term Debt , $400,000. 
C)  Current Liabilities, $100,000; Long-term Debt, $300,000. 
D)  Current Liabilities, $300,000; Long-term Debt, $100,000.

Question 7

A contingency need not be recorded nor disclosed when

Accepted Answer

A)  it is probable the contingency will happen and the amount can be reasonably estimated. 
B)  it is probable the contingency will happen but the amount cannot be reasonably estimated. 
C)  it is reasonably possible the contingency will happen and the amount can be reasonably estimated. 
D)  the possibility of the contingency happening is remote. 
A)  it is probable the contingency will happen and the amount can be reasonably estimated. 
B)  it is probable the contingency will happen but the amount cannot be reasonably estimated. 
C)  it is reasonably possible the contingency will happen and the amount can be reasonably estimated. 
D)  the possibility of the contingency happening is remote.

Question 8

The interest charged on a $50,000 note payable, at the rate of 6%, on a 2-month note would be

Accepted Answer

A)  $3,000. 
B)  $1,500. 
C)  $750. 
D)  $500. 
A)  $3,000. 
B)  $1,500. 
C)  $750. 
D)  $500.

Question 9

A cash register tape shows cash sales of $1,500 and sales taxes of $90. The journal entry to record this information is

Accepted Answer

The answer of A cash register tape shows cash sales...

Question 10

Prepare the necessary journal entries for the following transactions:
(a) On September 1, Cole Company borrowed $150,000 from National Bank on a 6-month, 8% note.
(b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

Accepted Answer

The answer of Prepare the necessary journal entries for the...

Question 11

The treasurer's department is responsible for

Accepted Answer

A)  approving the payroll. 
B)  maintaining payroll records. 
C)  preparing payroll tax returns. 
D)  signing payroll checks. 
A)  approving the payroll. 
B)  maintaining payroll records. 
C)  preparing payroll tax returns. 
D)  signing payroll checks.

Question 12

Donna Grace earns a salary of $8,000 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $27,300 was withheld for federal income taxes and $5,700 was withheld for state income taxes.
Instructions
(a) Prepare a journal entry summarizing the payment of Grace's total salary during the year.
(b) Prepare a journal entry summarizing the employer payroll tax expense on Grace's salary for the year.
(c) Determine the cost of employing Grace for the year.

Accepted Answer

The answer of Donna Grace earns a salary of $8,000...

Question 13

Interest expense on a note payable is only recorded at maturity.

Accepted Answer

A) True 
 B)False

Question 14

Hiatt Company had the following payroll data for the year:   
Assuming the following:   
Instructions
Compute Hiatt's payroll tax expense for the year. Make a summary journal entry to record the payroll tax expense.

Accepted Answer

The answer of Hiatt Company had the following payroll data...

Question 15

A current liability must be paid out of current earnings.

Accepted Answer

A) True 
 B)False

Question 16

Interest expense on an interest-bearing note is

Accepted Answer

A)  always equal to zero. 
B)  accrued over the life of the note. 
C)  only recorded at the time the note is issued. 
D)  only recorded at maturity when the note is paid. 
A)  always equal to zero. 
B)  accrued over the life of the note. 
C)  only recorded at the time the note is issued. 
D)  only recorded at maturity when the note is paid.

Question 17

Haney Company's payroll for the week ending January 15 amounted to $95,000 for Office Salaries and $150,000 for Store Wages. None of the employees has reached the earnings limits specified for federal or state employer payroll taxes. The following deductions were withheld from employees' salaries and wages:   
Federal unemployment tax (FUTA) rate is 6.2% less a credit equal to the rate paid for state unemployment taxes. The state unemployment tax (SUTA) rate is 5.4%.
Instructions
Prepare the journal entry to record the weekly payroll ending January 15 and also the employer's payroll tax expense on the payroll.

Accepted Answer

The answer of Haney Company's payroll for the week ending...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

FICA taxes and federal income taxes are levied on employees' earnings without limit.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 11: Current Liabilities and Payroll Accounting

Current maturities of long-term debt

Assuming a FICA tax rate of 8% on the first $100,000 in wages, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $110,000 for the year?

An employer's estimated cost for post-retirement benefits for its employees should be

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

Jan Goll has worked 44 hours this week. She worked in excess of 8 hours each day. Her regular hourly wage is $15 per hour. What are Jan's gross wages for the week? (The company Jan works for is in compliance with the Fair Labor Standards Act.)

On January 1, 2010, Donahue Company, a calendar-year company, issued $400,000 of notes payable, of which $100,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2010, is

A contingency need not be recorded nor disclosed when

The interest charged on a $50,000 note payable, at the rate of 6%, on a 2-month note would be

A cash register tape shows cash sales of $1,500 and sales taxes of $90. The journal entry to record this information is

Prepare the necessary journal entries for the following transactions: (a) On September 1, Cole Company borrowed $150,000 from National Bank on a 6-month, 8% note. (b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

The treasurer's department is responsible for

Interest expense on a note payable is only recorded at maturity.

Hiatt Company had the following payroll data for the year: Assuming the following: Instructions Compute Hiatt's payroll tax expense for the year. Make a summary journal entry to record the payroll tax expense.

A current liability must be paid out of current earnings.

Interest expense on an interest-bearing note is

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

FICA taxes and federal income taxes are levied on employees' earnings without limit.

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

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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