Question 1

A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Accepted Answer

At maturity: $60,000

Question 2

Unearned revenues are current liabilities.

Accepted Answer

A) True 
 B)False

Question 3

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. 
-What is the journal entry needed to record the transaction by Indigo Company?

Accepted Answer

A)  Debit Notes Payable $4,500; credit Accounts Payable $4,500. 
B)  Debit Sales $4,500; credit Notes Payable $4,500. 
C)  Debit Accounts Payable $4,500; credit Notes Payable $4,500. 
D)  Debit Cash $4,500; credit Notes Payable $4,500. 
E)  Debit Accounts Receivable $4,500; credit Notes Payable $4,500. 
A)  Debit Notes Payable $4,500; credit Accounts Payable $4,500. 
B)  Debit Sales $4,500; credit Notes Payable $4,500. 
C)  Debit Accounts Payable $4,500; credit Notes Payable $4,500. 
D)  Debit Cash $4,500; credit Notes Payable $4,500. 
E)  Debit Accounts Receivable $4,500; credit Notes Payable $4,500.

Question 4

Companies with many employees often use a special ________ account to pay employees.

Accepted Answer

The answer of Companies with many employees often use a...

Question 5

Classify each of the following items as either:
A. Current liability
B. Long-term liability
C. Not a liability
1. 60-day promissory note
2. Payment of a 4-year term loan due this year
3. Salaries payable
4. Debt guarantees
5. FICA taxes payable
6. Income taxes payable
7. Payment of a 30-year term loan due this year
8. Payment of a 30-year term loan due next year. (The company's operating cycle is 2 months.)
9. Warranty work completed this year
10. Accounts payable

Accepted Answer

1. A; 2. A; 3. A; 4.

Question 6

An employee earns $5,500 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 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. The employee has $182 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

Accepted Answer

A)  $841.50 
B)  $750.75 
C)  $464.75 
D)  $602.75 
E)  $420.75 
A)  $841.50 
B)  $750.75 
C)  $464.75 
D)  $602.75 
E)  $420.75

Question 7

A single liability cannot be divided between current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 8

The deferred income tax liability:

Accepted Answer

A)  Is a contingent liability. 
B)  Can result in a deferred income tax asset. 
C)  Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary. 
D)  Is never recorded. 
E)  Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government. 
A)  Is a contingent liability. 
B)  Can result in a deferred income tax asset. 
C)  Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary. 
D)  Is never recorded. 
E)  Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.

Question 9

An employee earns $9,450 for the current period. The cumulative earnings of previous pay periods is $110,000. Social security tax applies to the first $118,500 of employee earnings. Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare (1.45%) and federal income tax (15%).

Accepted Answer

\[\begin{array} { l r } 
\text { FICA-So

Question 10

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA
-Medicare is 1.45%.

Accepted Answer

Social Security taxe

Question 11

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Accepted Answer

A)  $320 
B)  $80 
C)  $0 
D)  $960 
E)  $160 
A)  $320 
B)  $80 
C)  $0 
D)  $960 
E)  $160

Question 12

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

Accepted Answer

A)  7.73. 
B)  0.11. 
C)  2.33. 
D)  8.73. 
E)  5.40. 
A)  7.73. 
B)  0.11. 
C)  2.33. 
D)  8.73. 
E)  5.40.

Question 13

All of the following statements related to recording warranty expense are true except:

Accepted Answer

A)  Recording estimated warranty expense complies with the full disclosure principle. 
B)  Warranty costs are probable and the amount can be estimated. 
C)  Warranty expense should be recorded in the period when the warranty service is performed. 
D)  Recording estimated warranty expense complies with the matching principle. 
E)  The seller reports a warranty obligation as a liability. 
A)  Recording estimated warranty expense complies with the full disclosure principle. 
B)  Warranty costs are probable and the amount can be estimated. 
C)  Warranty expense should be recorded in the period when the warranty service is performed. 
D)  Recording estimated warranty expense complies with the matching principle. 
E)  The seller reports a warranty obligation as a liability.

Question 14

SaveMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million. Valueland had income before interest expense and income taxes of
$3,596 million and interest expense of $1,143 million. Calculate the times interest earned for each company and comment on the results.

Accepted Answer

SaveMart times interest earned = 11.8; V

Question 15

Match between columns
                        Premises:  60-day promissory note
 Payment of a 4-year term loan due this year
 Salaries payable
 Debt guarantees
 FICA taxes payable
 Income taxes payable
 Payment of a 30-year term loan due this year
 Payment of a 30-year term loan due next year. (The company's operating cycle is 2 months.)
 Warranty work completed this year
 Accounts payable

Accepted Answer

The Answer of Current liability and Long-term liability and Not is...

Question 16

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds
$500.

Accepted Answer

A) True 
 B)False

Question 17

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Accepted Answer

A) True 
 B)False

Question 18

Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

Accepted Answer

A) True 
 B)False

Question 19

An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay.

Accepted Answer

A) True 
 B)False

Question 20

A short-term note payable:

Accepted Answer

A)  Is a contingent liability. 
B)  Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer. 
C)  Is an estimated liability. 
D)  Is not a liability until the due date. 
E)  Cannot be used to extend the payment period for an account payable. 
A)  Is a contingent liability. 
B)  Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer. 
C)  Is an estimated liability. 
D)  Is not a liability until the due date. 
E)  Cannot be used to extend the payment period for an account payable.

Exam 11: Current Liabilities and Payroll Accounting

A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Unearned revenues are current liabilities.

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. -What is the journal entry needed to record the transaction by Indigo Company?

Companies with many employees often use a special ________ account to pay employees.

A single liability cannot be divided between current and noncurrent liabilities.

The deferred income tax liability:

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA -Medicare is 1.45%.

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

All of the following statements related to recording warranty expense are true except:

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay.

A short-term note payable:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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