Question 1

Which of the following is a major 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 2

Net pay is the total amount of compensation that an employee takes home after the deductions are made.

Accepted Answer

A) True 
 B)False

Question 3

________ is a pay amount stated at an hourly rate.

Accepted Answer

A) Salary 
B) Wage 
C) Commission 
D) Bonus 
A) Salary 
B) Wage 
C) Commission 
D) Bonus

Question 4

If a long-term debt is paid in installments,the business will report the current portion of the note payable as a current liability.

Accepted Answer

A) True 
 B)False

Question 5

White Hat Digital,Inc.starts the year with a credit balance of $3,000 in its Estimated Warranty Payable account.During the year,there were $222,000 in sales and $4,900 in warranty repair payments.White Hat 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) $4,440 debit 
B) $4,900 credit 
C) $3,000 debit 
D) $2,540 credit 
A) $4,440 debit 
B) $4,900 credit 
C) $3,000 debit 
D) $2,540 credit

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of good internal controls over payroll?

Accepted Answer

A) Accounting for payroll should be separate from hiring and firing of employees. 
B) Disbursement of paychecks should not be separate from the function of maintaining payroll records. 
C) Hiring and firing employees should not be separated from accounting and from disbursing paychecks. 
D) Cash receipts from customers should be separated from the accounting for accounts receivable. 
A) Accounting for payroll should be separate from hiring and firing of employees. 
B) Disbursement of paychecks should not be separate from the function of maintaining payroll records. 
C) Hiring and firing employees should not be separated from accounting and from disbursing paychecks. 
D) Cash receipts from customers should be separated from the accounting for accounts receivable.

Question 8

The matching principle requires businesses to report Warranty Expense ________.

Accepted Answer

A) in the same period that the company records the revenue related to that warranty 
B) in the period prior to which the company records the revenue related to that warranty 
C) in the period after the related revenue is recorded 
D) in the long-term assets section of the balance sheet 
A) in the same period that the company records the revenue related to that warranty 
B) in the period prior to which the company records the revenue related to that warranty 
C) in the period after the related revenue is recorded 
D) in the long-term assets section of the balance sheet

Question 9

Tanner's gross pay for the week is $1,400.His yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6% and that Tanner's year-to-date pay has previously exceeded the $7,000 cap.What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

A) $0 
B) $20.3 
C) $104.3 
D) $84 
A) $0 
B) $20.3 
C) $104.3 
D) $84

Question 10

On December 31,2016,Jerry's,Inc.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 31,2017.What amount represents the current portion of Long-term Notes Payable at December 31,2016?

Accepted Answer

The current portion of notes payable is

Question 11

Spencer's gross pay for the week is $1,400.Spencer's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6% and that Spencer's year-to-date pay has not yet exceeded the $7,000 cap.What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

A) $197.61 
B) $188.30 
C) $104.30 
D) $84.00 
A) $197.61 
B) $188.30 
C) $104.30 
D) $84.00

Question 12

The information related to interest expense of Stereo Music,Inc.is given below:
 
Based on the above data,which of the following is the times-interest-earned ratio?

Accepted Answer

A) 3.92 times 
B) 3.54 times 
C) 6.1 times 
D) 4.54 times 
A) 3.92 times 
B) 3.54 times 
C) 6.1 times 
D) 4.54 times

Question 13

Applied Foods Corp.had cash sales of $598,000 during the month of August.Sales taxes of 6.5% were collected on the sales.Prepare the journal entry to record the sales revenue and sales tax for the month.

Accepted Answer

The answer of Applied Foods Corp.had cash sales of $598,000...

Question 14

Which of the following is an important internal control over payroll?

Accepted Answer

A) separating the duties of the disbursement of paychecks from the recording of payroll transactions in the ledger 
B) separating the duties of safeguarding property from record-keeping of property 
C) separating the duties of approving invoices from signing disbursement checks 
D) separating the duties of cash disbursement from bank reconciliations 
A) separating the duties of the disbursement of paychecks from the recording of payroll transactions in the ledger 
B) separating the duties of safeguarding property from record-keeping of property 
C) separating the duties of approving invoices from signing disbursement checks 
D) separating the duties of cash disbursement from bank reconciliations

Question 15

Corrections Services sells service plans for commercial computer maintenance.The price for each plan is $1,350 per year,paid in advance.On October 1,2016,a service plan was sold to a new customer for cash,and the plan covers the period October 1,2016 to September 30,2017.Adjusting entries are made on December 31 of each year.Prepare the journal entry for September 30,2017.

Accepted Answer

The answer of Corrections Services sells service plans for commercial...

Question 16

Gross pay is the total amount of compensation earned by an employee after the deductions are made.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is included in the entry to record the employer's payroll taxes?

Accepted Answer

A) a debit to State Unemployment Tax Payable 
B) a credit to Payroll Tax Expense 
C) a credit to FICA-OASDI Tax Payable 
D) a credit to Salaries Payable 
A) a debit to State Unemployment Tax Payable 
B) a credit to Payroll Tax Expense 
C) a credit to FICA-OASDI Tax Payable 
D) a credit to Salaries Payable

Question 18

Establishing controls for efficiency of the payroll process is one of the two key controls for payroll.

Accepted Answer

A) True 
 B)False

Question 19

Firewood,Inc.signed a three-year note payable for $45,000 at 13% annual interest.What is the interest expense for 2017 if the note was signed on August 1,2017? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Accepted Answer

A) $2,925 
B) $2,438 
C) $17,550 
D) $5,850 
A) $2,925 
B) $2,438 
C) $17,550 
D) $5,850

Question 20

FICA tax is paid by the employee only and is deducted from gross earnings.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll

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

Net pay is the total amount of compensation that an employee takes home after the deductions are made.

________ is a pay amount stated at an hourly rate.

If a long-term debt is paid in installments,the business will report the current portion of the note payable as a current liability.

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

Which of the following is true of good internal controls over payroll?

The matching principle requires businesses to report Warranty Expense ________.

The information related to interest expense of Stereo Music,Inc.is given below: Based on the above data,which of the following is the times-interest-earned ratio?

Applied Foods Corp.had cash sales of $598,000 during the month of August.Sales taxes of 6.5% were collected on the sales.Prepare the journal entry to record the sales revenue and sales tax for the month.

Which of the following is an important internal control over payroll?

Gross pay is the total amount of compensation earned by an employee after the deductions are made.

Which of the following is included in the entry to record the employer's payroll taxes?

Establishing controls for efficiency of the payroll process is one of the two key controls for payroll.

Firewood,Inc.signed a three-year note payable for $45,000 at 13% annual interest.What is the interest expense for 2017 if the note was signed on August 1,2017? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

FICA tax is paid by the employee only and is deducted from gross earnings.

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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