Question 1

Times interest earned is calculated by:

Accepted Answer

A) Multiplying interest expense by income. 
B) Dividing interest expense by income before depreciation and interest expense. 
C) Dividing income before interest expense and income taxes by interest expense. 
D) Multiplying interest expense by income before interest expense. 
E) Dividing income before interest expense by interest expense and income taxes. 
A) Multiplying interest expense by income. 
B) Dividing interest expense by income before depreciation and interest expense. 
C) Dividing income before interest expense and income taxes by interest expense. 
D) Multiplying interest expense by income before interest expense. 
E) Dividing income before interest expense by interest expense and income taxes.

Question 2

On November 1,Casey's Snowboards signed a $12,000,90-day,5% note payable to cover a past due account payable.
a.What amount of interest expense on this note should Casey's Snowboards report on year-end December 31?
b.Prepare Casey's journal entry to record the issuance of the note payable.
c.Prepare Casey's adjusting journal entry at the end of the year
d.Prepare Casey's journal entry to record the payment of the note on January 30 of the following year.

Accepted Answer

a. Interest expense

Question 3

A short-term note payable is a written promise to pay a specified amount on a stated future date within five years or the operating cycle,whichever is more reasonable.

Accepted Answer

A) True 
 B)False

Question 4

All of the following statements regarding liabilities are true except:

Accepted Answer

A) A liability is a probable future payment of assets or services. 
B) Potential future wages to be paid to employees should be recorded as liabilities. 
C) For a liability to be reported,it must be a present obligation that results from a past transaction or event,and requires a future payment of assets or services. 
D) Information about liabilities is more useful when the balance sheet identifies them as either current or long term. 
E) Liabilities can involve uncertainty in whom to pay. 
A) A liability is a probable future payment of assets or services. 
B) Potential future wages to be paid to employees should be recorded as liabilities. 
C) For a liability to be reported,it must be a present obligation that results from a past transaction or event,and requires a future payment of assets or services. 
D) Information about liabilities is more useful when the balance sheet identifies them as either current or long term. 
E) Liabilities can involve uncertainty in whom to pay.

Question 5

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Accepted Answer

Estimated liabilities are known obligati

Question 6

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n):

Accepted Answer

A) Federal depository bank account. 
B) Employee's Individual Earnings account. 
C) Employees' bank account. 
D) Payroll register account. 
E) Payroll bank account. 
A) Federal depository bank account. 
B) Employee's Individual Earnings account. 
C) Employees' bank account. 
D) Payroll register account. 
E) Payroll bank account.

Question 7

Santa Barbara Express has 4 sales employees,each of whom earns $5,000 per month and is paid on the last working day of the month.Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages.Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee.
a.Prepare the general journal entry to accrue the monthly sales salaries expense at January 31.
b.The employer payroll taxes for Santa Barbara Express include FICA taxes,federal unemployment taxes of 0.6% of the first $7,000 paid each employee,and state unemployment taxes of 5.4% of the first $7,000 paid to each employee.Prepare the journal entry to record the employer's payroll taxes at January 31 for Santa Barbara Express.(Assume that none of the employees has reached the unemployment limit of $7,000.)

Accepted Answer

The answer of Santa Barbara Express has 4 sales employees,each...

Question 8

All of the following statements related to estimated liabilities are true except:

Accepted Answer

A) Are a known obligation of an uncertain amount that can be reasonably estimated. 
B) Include vacation benefits or paid absences. 
C) Depends on the likelihood that a future event will occur. 
D) Entry to record includes a debit to an expense account and credit to a payable account. 
E) Can be both current and long term. 
A) Are a known obligation of an uncertain amount that can be reasonably estimated. 
B) Include vacation benefits or paid absences. 
C) Depends on the likelihood that a future event will occur. 
D) Entry to record includes a debit to an expense account and credit to a payable account. 
E) Can be both current and long term.

Question 9

Describe contingent liabilities and how to account for and/or report them.

Accepted Answer

Contingent liabilities are uncertain obl

Question 10

What are known current liabilities? Cite at least two examples of known current liabilities.

Accepted Answer

Known current liabilities are obligation

Question 11

A company's income before interest expense and income taxes in Year 1 and Year 2 is $225,000 and $250,000,respectively.Its interest expense was $45,000 for both years.Calculate the company's times interest earned ratio,and comment on its level of risk.

Accepted Answer

Year 1: 5.0
Year 2: 5.6
Risk analysis: T

Question 12

Vacation benefits is an example of a known liability.

Accepted Answer

A) True 
 B)False

Question 13

The total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes is called ________.

Accepted Answer

The answer of The total compensation an employee earns including...

Question 14

________ are amounts owed to suppliers for products or services purchased on credit.

Accepted Answer

Trade acco

Question 15

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

Accepted Answer

The answer of Times interest earned is computed by dividing...

Question 16

If a company has advance subscription sales totaling $45,000 for the upcoming year,when four quarterly journals will mailed to customers,the receipt of cash would be journalized as:

Accepted Answer

A) Debit Cash $45,000; credit Unearned Revenue $45,000. 
B) Debit Unearned Revenue $45,000; credit Sales $45,000. 
C) Debit Cash $45,000,credit Accounts Payable $45,000. 
D) Debit Sales $45,000,credit Unearned Revenue $45,000. 
E) Debit Prepaid Subscriptions $45,000,credit Sales $45,000. 
A) Debit Cash $45,000; credit Unearned Revenue $45,000. 
B) Debit Unearned Revenue $45,000; credit Sales $45,000. 
C) Debit Cash $45,000,credit Accounts Payable $45,000. 
D) Debit Sales $45,000,credit Unearned Revenue $45,000. 
E) Debit Prepaid Subscriptions $45,000,credit Sales $45,000.

Question 17

If the times interest earned ratio:

Accepted Answer

A) Increases,then risk increases. 
B) Increases,then risk decreases. 
C) Is greater than 1.5,the company is in default. 
D) Is less than 1.5,the company is carrying too little debt. 
E) Is greater than 3.0,the company is likely carrying too much debt. 
A) Increases,then risk increases. 
B) Increases,then risk decreases. 
C) Is greater than 1.5,the company is in default. 
D) Is less than 1.5,the company is carrying too little debt. 
E) Is greater than 3.0,the company is likely carrying too much debt.

Question 18

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

Accepted Answer

probable; reasonably

Question 19

An employee earned $4,600 in February working for an employer.Cumulative earnings of the previous pay periods are $4,800.The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount the employer should record as payroll taxes expense for the month of February?

Accepted Answer

A) $581.90 
B) $110.00 
C) $351.90 
D) $483.90 
E) $230.00 
A) $581.90 
B) $110.00 
C) $351.90 
D) $483.90 
E) $230.00

Question 20

Gross pay is:

Accepted Answer

A) Take-home pay. 
B) Total compensation earned by an employee before any deductions. 
C) Salaries after taxes are deducted. 
D) Deductions withheld by an employer. 
E) The amount of the paycheck. 
A) Take-home pay. 
B) Total compensation earned by an employee before any deductions. 
C) Salaries after taxes are deducted. 
D) Deductions withheld by an employer. 
E) The amount of the paycheck.

Exam 9: Accounting for Current Liabilities

Times interest earned is calculated by:

A short-term note payable is a written promise to pay a specified amount on a stated future date within five years or the operating cycle,whichever is more reasonable.

All of the following statements regarding liabilities are true except:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n):

All of the following statements related to estimated liabilities are true except:

Describe contingent liabilities and how to account for and/or report them.

What are known current liabilities? Cite at least two examples of known current liabilities.

A company's income before interest expense and income taxes in Year 1 and Year 2 is $225,000 and $250,000,respectively.Its interest expense was $45,000 for both years.Calculate the company's times interest earned ratio,and comment on its level of risk.

Vacation benefits is an example of a known liability.

The total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes is called ________.

________ are amounts owed to suppliers for products or services purchased on credit.

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

If a company has advance subscription sales totaling $45,000 for the upcoming year,when four quarterly journals will mailed to customers,the receipt of cash would be journalized as:

If the times interest earned ratio:

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

Gross pay is:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters

Contingent liabilities are recorded in the accounts if the future event is and the amount owed can be .