Question 1

The entry to estimate warranty payable includes a credit to Warranty expense.

Accepted Answer

A) True 
 B)False

Question 2

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.Please provide the second entry in the payroll cycle to record the disbursement of his net pay.
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\hline \quad\quad\quad&\quad&\quad \
\hline \\hline \\hline \
\hline
\end{array}$$

Accepted Answer

Calculations:
$4,000 × 18% =

Question 3

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

Accepted Answer

A) True 
 B)False

Question 4

Notes payable are considered short-term if they are due within the current operating cycle.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following taxes does NOT have a limit on the amount of tax paid per individual?

Accepted Answer

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

Question 6

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

Accepted Answer

A) True 
 B)False

Question 7

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,what effect would this have on the financial reporting of the company?

Accepted Answer

A)  There would be no effect. 
B)  The liabilities on the balance sheet would be understated. 
C)  The information about the transaction would be inadequately disclosed in the notes. 
D)  The net income of the company would be understated. 
A)  There would be no effect. 
B)  The liabilities on the balance sheet would be understated. 
C)  The information about the transaction would be inadequately disclosed in the notes. 
D)  The net income of the company would be understated.

Question 8

The Statewide Sales Company has gross pay for March of $45,000.Which of the following is the first journal entry in the payroll cycle to record salary expense?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 45,000 & \
\hline \text { Salary payable } & & 45,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary payable } & 45,000 & \
\hline \text { Salary expense } & & 45,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 45,000 & \
\hline \text { Cash } & & 45,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 45,000 & \
\hline \text { Salary expense } & & 45,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 45,000 & \
\hline \text { Salary payable } & & 45,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary payable } & 45,000 & \
\hline \text { Salary expense } & & 45,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 45,000 & \
\hline \text { Cash } & & 45,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 45,000 & \
\hline \text { Salary expense } & & 45,000 \
\hline
\end{array}$$

Question 9

Charter Services sells a service plan for commercial computer maintenance.The price is $1,200 per year,paid in advance.On December 1,2013,Charter sells a service plan to a new customer for cash.Please provide the journal entry to record the adjustment needed on December 31,2013.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

Calculations: $1,20

Question 10

Tractor World offers warranties on all their tractors.They estimate warranty expense at 2.4% of sales.At the beginning of 2013,the Estimated warranty payable account had a credit balance of $900.During the year,Tractor World had $285,000 of sales,and had to pay out $5,100 in warranty payments.
-At the end of the year,how much Warranty expense was reported on the income statement?

Accepted Answer

A)  $2,640 
B)  $5,100 
C)  $4,200 
D)  $6,840 
A)  $2,640 
B)  $5,100 
C)  $4,200 
D)  $6,840

Question 11

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of Tom's net pay?

Accepted Answer

A)  $594.80 
B)  $738.80 
C)  $656.00 
D)  $533.60 
A)  $594.80 
B)  $738.80 
C)  $656.00 
D)  $533.60

Question 12

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has previously exceeded the $7,000 cap.How much is the amount of state and federal unemployment tax that Tom's employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

A)  $0 
B)  $38.80 
C)  $99.20 
D)  $49.60 
A)  $0 
B)  $38.80 
C)  $99.20 
D)  $49.60

Question 13

Tractor World offers warranties on all their tractors.They estimate warranty expense at 2.4% of sales.At the beginning of 2013,the Estimated warranty payable account had a credit balance of $900.During the year,Tractor World had $285,000 of sales,and had to pay out $5,100 in warranty payments.
-At the end of the year,what balance in Estimated warranty payable would be included in the balance sheet?

Accepted Answer

A)  $2,640 
B)  $5,100 
C)  $4,200 
D)  $6,840 
A)  $2,640 
B)  $5,100 
C)  $4,200 
D)  $6,840

Question 14

Face value of a note payable plus total interest is called:

Accepted Answer

A)  maturity value. 
B)  face value. 
C)  proceeds. 
D)  principal. 
A)  maturity value. 
B)  face value. 
C)  proceeds. 
D)  principal.

Question 15

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Please provide the fourth journal entry in the payroll cycle to record the employer's payroll taxes.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

Calculations: $4,00

Question 16

Payroll tax expense includes the employer's portion of FICA taxes,state unemployment taxes,and federal unemployment taxes.

Accepted Answer

A) True 
 B)False

Question 17

Federal unemployment tax is a tax expense that is borne by the employer alone,and is not deducted from the employee's pay.

Accepted Answer

A) True 
 B)False

Question 18

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has previously exceeded the $7,000 cap.How much is the total amount of payroll taxes that Tom's employer must record as payroll tax expenses?

Accepted Answer

A)  $61.20 
B)  $38.80 
C)  $110.80 
D)  $49.60 
A)  $61.20 
B)  $38.80 
C)  $110.80 
D)  $49.60

Question 19

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behavior.

Accepted Answer

A) True 
 B)False

Question 20

Estimated warranty payable would be included in the liability section of the balance sheet.

Accepted Answer

A) True 
 B)False

The entry to estimate warranty payable includes a credit to Warranty expense.

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

Notes payable are considered short-term if they are due within the current operating cycle.

Which of the following taxes does NOT have a limit on the amount of tax paid per individual?

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

The Statewide Sales Company has gross pay for March of $45,000.Which of the following is the first journal entry in the payroll cycle to record salary expense?

Charter Services sells a service plan for commercial computer maintenance.The price is $1,200 per year,paid in advance.On December 1,2013,Charter sells a service plan to a new customer for cash.Please provide the journal entry to record the adjustment needed on December 31,2013.

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of Tom's net pay?

Face value of a note payable plus total interest is called:

Payroll tax expense includes the employer's portion of FICA taxes,state unemployment taxes,and federal unemployment taxes.

Federal unemployment tax is a tax expense that is borne by the employer alone,and is not deducted from the employee's pay.

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behavior.

Estimated warranty payable would be included in the liability section of the balance sheet.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 10: Current Liabilities and Payroll

The entry to estimate warranty payable includes a credit to Warranty expense.

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

Notes payable are considered short-term if they are due within the current operating cycle.

Which of the following taxes does NOT have a limit on the amount of tax paid per individual?

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

The Statewide Sales Company has gross pay for March of $45,000.Which of the following is the first journal entry in the payroll cycle to record salary expense?

Charter Services sells a service plan for commercial computer maintenance.The price is $1,200 per year,paid in advance.On December 1,2013,Charter sells a service plan to a new customer for cash.Please provide the journal entry to record the adjustment needed on December 31,2013.

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of Tom's net pay?

Face value of a note payable plus total interest is called:

Payroll tax expense includes the employer's portion of FICA taxes,state unemployment taxes,and federal unemployment taxes.

Federal unemployment tax is a tax expense that is borne by the employer alone,and is not deducted from the employee's pay.

A certain contingent liability was evaluated at year-end,and considered to have a reasonable possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,this could be considered unethical behavior.

Estimated warranty payable would be included in the liability section of the balance sheet.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters