Question 1

Only contingencies that are probable and can be estimated are recorded as a liability and an accrued expense.

Accepted Answer

A) True 
 B)False

Question 2

Keith,an employee of Sunbeam,Inc.,has gross salary for May of $15,000.The entire amount is under the OASDI limit of $118,500 and thus subject to FICA.He is also subject to federal income tax at a rate of 20%.Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)(Round the final answer to the nearest dollar.)

Accepted Answer

A)  debit to Cash for $10,852.50 
B)  credit to Cash for $10,852.50 
C)  debit to Employee Income Tax Payable of $10,852.50 
D)  debit to FICA Tax Payable of $10,852.50 
A)  debit to Cash for $10,852.50 
B)  credit to Cash for $10,852.50 
C)  debit to Employee Income Tax Payable of $10,852.50 
D)  debit to FICA Tax Payable of $10,852.50

Question 3

The matching principle requires businesses to record Warranty Expense when the warranty costs are incurred.

Accepted Answer

A) True 
 B)False

Question 4

The current portion of long-term notes payable is ________.

Accepted Answer

A)  the amount of principal that will be paid within five years 
B)  typically included with the long-term liabilities on the balance sheet 
C)  recorded as an adjusting entry 
D)  reclassified as current for reporting purposes on the balance sheet 
A)  the amount of principal that will be paid within five years 
B)  typically included with the long-term liabilities on the balance sheet 
C)  recorded as an adjusting entry 
D)  reclassified as current for reporting purposes on the balance sheet

Question 5

Barron Company sold goods for $883,500 on account.The company operates in a state that imposes a 9% sales tax.What is the amount of the sales tax payable to the state?

Accepted Answer

A)  $79,515 
B)  $39,758 
C)  $19,879 
D)  $159,030 
A)  $79,515 
B)  $39,758 
C)  $19,879 
D)  $159,030

Question 6

Fleetwood Company signed a three-year note payable for $59,000 at 7% annual interest.What is the interest expense for 2019 if the note was signed on August 1,2019? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accepted Answer

A)  $2065 
B)  $1721 
C)  $12,390 
D)  $4130 
A)  $2065 
B)  $1721 
C)  $12,390 
D)  $4130

Question 7

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

Accepted Answer

A) True 
 B)False

Question 8

Angie's gross pay for the week is $970.00.Her deduction for federal income tax is based on a rate of 20%.She has voluntary deductions of $220.00.Her year-to-date pay is under the limit for OASDI.What is the amount of FICA-Medicare Tax deducted from her pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.Do not round any intermediate calculations,and round your final answer to the nearest cent.)

Accepted Answer

A)  $194.00 
B)  $14.07 
C)  $60.14 
D)  $268.21 
A)  $194.00 
B)  $14.07 
C)  $60.14 
D)  $268.21

Question 9

When using a payroll register,Salaries and Wages Expense equals the current period earnings of employees.

Accepted Answer

A) True 
 B)False

Question 10

All Things Digital Company starts the year with a credit balance of $3500 in its Estimated Warranty Payable account.During the year,there were $224,000 in sales and $4800 in warranty repair payments.All Things Digital estimates warranty expense at 2% of sales.At the end of the year,what is the balance in the Estimated Warranty Payable account?

Accepted Answer

A)  $4480 debit 
B)  $4800 credit 
C)  $3500 debit 
D)  $3180 credit 
A)  $4480 debit 
B)  $4800 credit 
C)  $3500 debit 
D)  $3180 credit

Question 11

Which of the following statements about the times-interest-earned ratio is TRUE?

Accepted Answer

A)  A lower ratio indicates a higher debt paying ability. 
B)  Debt reduction leads to an increase in interest expense. 
C)  The times-interest-earned ratio is also called the interest-coverage ratio. 
D)  The times-interest-earned ratio is calculated by dividing gross income by interest expense. 
A)  A lower ratio indicates a higher debt paying ability. 
B)  Debt reduction leads to an increase in interest expense. 
C)  The times-interest-earned ratio is also called the interest-coverage ratio. 
D)  The times-interest-earned ratio is calculated by dividing gross income by interest expense.

Question 12

The journal entry for accrued interest on a note payable includes ________.

Accepted Answer

A)  a debit to Interest Expense and credit to Cash 
B)  a debit to Interest Expense and credit to Interest Payable 
C)  a debit to Interest Payable and credit to Cash 
D)  a credit to Interest Expense and debit to Notes Payable 
A)  a debit to Interest Expense and credit to Cash 
B)  a debit to Interest Expense and credit to Interest Payable 
C)  a debit to Interest Payable and credit to Cash 
D)  a credit to Interest Expense and debit to Notes Payable

Question 13

Warranty Expense is shown on the income statement at the estimated amount.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be included in the journal entry to record the payment of sales tax payable?

Accepted Answer

A)  a debit to Sales Tax Payable 
B)  a credit to Sales Tax Expense 
C)  a debit to Sales Tax Expense 
D)  a credit to Sales Tax Payable 
A)  a debit to Sales Tax Payable 
B)  a credit to Sales Tax Expense 
C)  a debit to Sales Tax Expense 
D)  a credit to Sales Tax Payable

Question 15

A payroll register is a schedule that summarizes the earnings,withholdings,and net pay for each employee.

Accepted Answer

A) True 
 B)False

Question 16

If the likelihood of a future event is remote,how should the company report the contingency?

Accepted Answer

A LIABILITY IS NOT R

Question 17

Contingencies that are probable but cannot be estimated are recorded as liabilities and disclosed in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is the proper treatment for a contingency that is probable but the exact amount of which is not known? The amount can be estimated.

Accepted Answer

A)  The liability should be doubled following conservatism. 
B)  The liability should be estimated and recorded. 
C)  The liability should be ignored. 
D)  The liability should be reported in the notes to the financial statements. 
A)  The liability should be doubled following conservatism. 
B)  The liability should be estimated and recorded. 
C)  The liability should be ignored. 
D)  The liability should be reported in the notes to the financial statements.

Question 19

Which of the following is a reason why many companies require a photo ID when employees pick up their paychecks?

Accepted Answer

A)  to make sure an employee's work hours have been accurately reported 
B)  to avoid writing a paycheck to a fictitious person 
C)  to improve efficiency of the payroll disbursement process 
D)  to make sure all employees are legal adults 
A)  to make sure an employee's work hours have been accurately reported 
B)  to avoid writing a paycheck to a fictitious person 
C)  to improve efficiency of the payroll disbursement process 
D)  to make sure all employees are legal adults

Question 20

When determining how businesses record or do not record contingent liabilities,which is NOT one of the three likelihoods that that are considered?

Accepted Answer

A)  remote 
B)  reasonably probable 
C)  probable 
D)  reasonably possible 
A)  remote 
B)  reasonably probable 
C)  probable 
D)  reasonably possible

Exam 11: Current Liabilities and Payroll

Only contingencies that are probable and can be estimated are recorded as a liability and an accrued expense.

The matching principle requires businesses to record Warranty Expense when the warranty costs are incurred.

The current portion of long-term notes payable is ________.

Barron Company sold goods for $883,500 on account.The company operates in a state that imposes a 9% sales tax.What is the amount of the sales tax payable to the state?

Fleetwood Company signed a three-year note payable for $59,000 at 7% annual interest.What is the interest expense for 2019 if the note was signed on August 1,2019? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

When using a payroll register,Salaries and Wages Expense equals the current period earnings of employees.

Which of the following statements about the times-interest-earned ratio is TRUE?

The journal entry for accrued interest on a note payable includes ________.

Warranty Expense is shown on the income statement at the estimated amount.

Which of the following would be included in the journal entry to record the payment of sales tax payable?

A payroll register is a schedule that summarizes the earnings,withholdings,and net pay for each employee.

If the likelihood of a future event is remote,how should the company report the contingency?

Contingencies that are probable but cannot be estimated are recorded as liabilities and disclosed in the notes to the financial statements.

Which of the following is the proper treatment for a contingency that is probable but the exact amount of which is not known? The amount can be estimated.

Which of the following is a reason why many companies require a photo ID when employees pick up their paychecks?

When determining how businesses record or do not record contingent liabilities,which is NOT one of the three likelihoods that that are considered?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters