Question 1

Federal unemployment compensation tax (FUTA)is not withheld from employees' gross earnings.

Accepted Answer

A) True 
 B)False

Question 2

When borrowing cash from a bank,the business is required to sign a promissory note stating that the business will pay the principal plus interest at a specified maturity date.

Accepted Answer

A) True 
 B)False

Question 3

If a contingency is remote,the company does not need to record a liability and does not need to disclose it in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 4

Under IFRS,"probable" is defined as more than a 50% chance.

Accepted Answer

A) True 
 B)False

Question 5

Sales tax is an expense of the business.

Accepted Answer

A) True 
 B)False

Question 6

A $49,000,three-month,12% note payable was issued on December 1,2018.What is the amount of accrued interest on December 31,2018? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accepted Answer

A)  $490 
B)  $708 
C)  $354 
D)  $823 
A)  $490 
B)  $708 
C)  $354 
D)  $823

Question 7

Which of the following accounts will be credited by the borrower when a promissory note is issued?

Accepted Answer

A)  Note Payable 
B)  Note Receivable 
C)  Interest Payable 
D)  Cash 
A)  Note Payable 
B)  Note Receivable 
C)  Interest Payable 
D)  Cash

Question 8

Solutions Services sells service plans for commercial computer maintenance.The price for each plan is $1,350 per year,paid in advance.On October 1,2018,a service plan was sold to a new customer for cash,and the plan covers the period October 1,2018 to September 30,2019.Adjusting entries are made on December 31 of each year.Prepare the journal entry for September 30,2019.Round to two decimal places.Omit explanation.

Accepted Answer

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Question 9

On July 1,2018,Sanchez Company purchased merchandise inventory for $350,000 by signing a note payable.The note is for 6 months and bears interest at a rate of 8%.Prepare the journal entry for this transaction,using a perpetual inventory system.Omit explanation.

Accepted Answer

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Question 10

On December 31,2018,Globe Company borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2019.Which portion is classified as the long-term portion of Notes Payable at December 31,2018?

Accepted Answer

The current portion of notes payable is

Question 11

FICA tax is paid by the employee only.

Accepted Answer

A) True 
 B)False

Question 12

Maywood Company recently signed a $350,000,six-month note on August 22,2019.The interest rate is 7%.How much interest will be due at maturity?

Accepted Answer

A)  $10,208 
B)  $24,500 
C)  $12,250 
D)  $8167 
A)  $10,208 
B)  $24,500 
C)  $12,250 
D)  $8167

Question 13

Which of the following is a control risk related to payroll?

Accepted Answer

A)  theft of inventory by staff 
B)  a dishonest employee cashing a paycheck that was written to a fictitious person 
C)  expenses being recorded as assets in order to manipulate earnings 
D)  contracts being awarded to relatives of employees 
A)  theft of inventory by staff 
B)  a dishonest employee cashing a paycheck that was written to a fictitious person 
C)  expenses being recorded as assets in order to manipulate earnings 
D)  contracts being awarded to relatives of employees

Question 14

Cycle Sales Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2019,the Estimated Warranty Payable account had a credit balance of $1400.During the year,Cycle Sales had $299,000 in sales and had to pay out $5900 in warranty payments.How much Warranty Expense will be reported on the 2019 income statement?

Accepted Answer

A)  $5965 
B)  $7300 
C)  $9065 
D)  $10,465 
A)  $5965 
B)  $7300 
C)  $9065 
D)  $10,465

Question 15

The Human Resources Department employees should pass out paychecks,hire employees,and fire employees.

Accepted Answer

A) True 
 B)False

Question 16

At the maturity of a note payable,a borrower will pay ________.

Accepted Answer

A)  the principal plus interest 
B)  the principal amount only 
C)  the interest amount only 
D)  the principal minus interest 
A)  the principal plus interest 
B)  the principal amount only 
C)  the interest amount only 
D)  the principal minus interest

Question 17

Vacation pay is an example a liability that exists but the exact amount is not known.

Accepted Answer

A) True 
 B)False

Question 18

Mario worked 48 hours during the work week.He earns wages of $18 per hour for straight time (40 hours).The company pays time-and-half for overtime.Mario's gross pay is $864.

Accepted Answer

A) True 
 B)False

Question 19

Benefits are extra compensation items that are not paid directly to an employee.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following taxes has a ceiling on the amount of annual earnings subject to tax?

Accepted Answer

A)  FICA-OASDI taxes 
B)  sales tax 
C)  federal income tax 
D)  FICA-Medicare taxes 
A)  FICA-OASDI taxes 
B)  sales tax 
C)  federal income tax 
D)  FICA-Medicare taxes

Exam 11: Current Liabilities and Payroll

Federal unemployment compensation tax (FUTA)is not withheld from employees' gross earnings.

When borrowing cash from a bank,the business is required to sign a promissory note stating that the business will pay the principal plus interest at a specified maturity date.

If a contingency is remote,the company does not need to record a liability and does not need to disclose it in the notes to the financial statements.

Under IFRS,"probable" is defined as more than a 50% chance.

Sales tax is an expense of the business.

A $49,000,three-month,12% note payable was issued on December 1,2018.What is the amount of accrued interest on December 31,2018? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Which of the following accounts will be credited by the borrower when a promissory note is issued?

On July 1,2018,Sanchez Company purchased merchandise inventory for $350,000 by signing a note payable.The note is for 6 months and bears interest at a rate of 8%.Prepare the journal entry for this transaction,using a perpetual inventory system.Omit explanation.

FICA tax is paid by the employee only.

Maywood Company recently signed a $350,000,six-month note on August 22,2019.The interest rate is 7%.How much interest will be due at maturity?

Which of the following is a control risk related to payroll?

The Human Resources Department employees should pass out paychecks,hire employees,and fire employees.

At the maturity of a note payable,a borrower will pay ________.

Vacation pay is an example a liability that exists but the exact amount is not known.

Mario worked 48 hours during the work week.He earns wages of $18 per hour for straight time (40 hours).The company pays time-and-half for overtime.Mario's gross pay is $864.

Benefits are extra compensation items that are not paid directly to an employee.

Which of the following taxes has a ceiling on the amount of annual earnings subject to tax?

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

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