Question 1

Employer FICA is paid by the employer and recorded as a payroll tax expense.

Accepted Answer

A) True 
 B)False

Question 2

Regarding net pay,which of the following statements is incorrect?

Accepted Answer

A) The net pay amount is not important for accounting purposes. 
B) The amount of compensation that the employee actually takes home is net pay. 
C) The employer either writes a paycheck to each employee for his or her net pay or directly deposits the employee's net pay into the employee's bank account. 
D) Net pay equals gross pay minus all deductions. 
A) The net pay amount is not important for accounting purposes. 
B) The amount of compensation that the employee actually takes home is net pay. 
C) The employer either writes a paycheck to each employee for his or her net pay or directly deposits the employee's net pay into the employee's bank account. 
D) Net pay equals gross pay minus all deductions.

Question 3

You have started working for a company that manufactures lawn mowers.These mowers carry a warranty that will replace defective parts for one year.The corporate president feels that an expense should be recorded when the defective parts are replaced.Explain the proper accounting treatment to the corporate president.

Accepted Answer

The matching principle requires business

Question 4

The Social Security system is funded by contributions from both the employer and employee.

Accepted Answer

A) True 
 B)False

Question 5

Tryst,Inc.has a policy of accruing $2,400 for every employee as a vacation benefit.Sarah,an employee,took a vacation.Which of the following is the correct journal entry for the vacation benefit paid?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 6

On June 30,2017,Nightvale,Inc.purchased merchandise inventory for $500,000 by signing a six-month,8% note payable.Prepare the journal entry for the payment of the note on December 30,2016.

Accepted Answer

The answer of On June 30,2017,Nightvale,Inc.purchased merchandise inventory for $500,000...

Question 7

Which of the following accounts is credited by the seller when tax is collected on retail sales?

Accepted Answer

A) Accounts Payable 
B) Payroll Tax 
C) Sales Tax Payable 
D) Unearned Revenue 
A) Accounts Payable 
B) Payroll Tax 
C) Sales Tax Payable 
D) Unearned Revenue

Question 8

Jupiter Services sells service plans for commercial computer maintenance.The price for each service plan is $1,650 per year,paid in advance.On October 1,2017,a service plan was sold to a new customer for cash.Prepare the journal entry to record this transaction.

Accepted Answer

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

Question 9

Which of the following is included in the entry to record accrual of warranty expense?

Accepted Answer

A) a debit to Warranty Expense 
B) a credit to Merchandise Inventory 
C) a credit to Warranty Expense 
D) a debit to Estimated Warranty Payable 
A) a debit to Warranty Expense 
B) a credit to Merchandise Inventory 
C) a credit to Warranty Expense 
D) a debit to Estimated Warranty Payable

Question 10

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 11

Complete the table to show how each type of employee pay is generally stated.

Accepted Answer

The answer of Complete the table to show how each...

Question 12

On September 1,2017,Neighborhood,Inc.borrowed $125,000 by signing a nine-month,7.2% note payable.Prepare the journal entry to accrue interest expense on December 31,2016.

Accepted Answer

The answer of On September 1,2017,Neighborhood,Inc.borrowed $125,000 by signing a...

Question 13

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 14

A corporation has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit.The company's lawyers believe it is more than remote,but less than probable,that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

Accepted Answer

A) The liability should be estimated and recorded as an expense. 
B) The situation should be described in a note to the financial statements. 
C) The possible liability should be ignored. 
D) Management should consider resigning. 
A) The liability should be estimated and recorded as an expense. 
B) The situation should be described in a note to the financial statements. 
C) The possible liability should be ignored. 
D) Management should consider resigning.

Question 15

A high interest-coverage ratio indicates a company's difficulty in paying interest expense.

Accepted Answer

A) True 
 B)False

Question 16

The current period earnings column of the payroll register only includes regular and overtime earnings.

Accepted Answer

A) True 
 B)False

Question 17

Sean's gross pay for this month is $9,250.His gross year-to-date pay,prior to this month,totaled $110,500.Sean's rate for federal income tax is 20%.His voluntary deductions total $1,000.What is Sean's net pay? (Assume an OASDI rate of 6.2%,applicable on the first $117,000 earnings,and a Medicare rate of 1.45%,applicable on all earnings.Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

A) $6,862.87 
B) $6,400.00 
C) $7,400.00 
D) $5,862.87 
A) $6,862.87 
B) $6,400.00 
C) $7,400.00 
D) $5,862.87

Question 18

A restaurant is being sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

Accepted Answer

A) The situation should be described in a note to the financial statements. 
B) The possible liability should not be shown in the financial statements. 
C) The liability should be estimated and accrued as an expense. 
D) An expense must be matched to the period in which the incident occurred. 
A) The situation should be described in a note to the financial statements. 
B) The possible liability should not be shown in the financial statements. 
C) The liability should be estimated and accrued as an expense. 
D) An expense must be matched to the period in which the incident occurred.

Question 19

Which of the following statements regarding vacation benefits is correct?

Accepted Answer

A) No entry is needed until the employee takes paid vacation. 
B) The account,Vacation Expense is debited when the employee takes paid vacation. 
C) Health and pension benefits are recorded in the same manner as vacation benefits. 
D) When an employee takes paid vacation,the account,Vacation Benefits Payable is credited. 
A) No entry is needed until the employee takes paid vacation. 
B) The account,Vacation Expense is debited when the employee takes paid vacation. 
C) Health and pension benefits are recorded in the same manner as vacation benefits. 
D) When an employee takes paid vacation,the account,Vacation Benefits Payable is credited.

Question 20

Sales revenue for a sporting goods store amounted to $539,000 for the current period.All sales are on account and are subject to a sales tax of 11%.Which of the following would be included in the journal entry to record the sales transaction?

Accepted Answer

A) a debit to Sales Revenue for $539,000 
B) a credit to Accounts Receivable for $539,000 
C) a debit to Sales Tax Payable for $59,290 
D) a debit to Accounts Receivable for $598,290 
A) a debit to Sales Revenue for $539,000 
B) a credit to Accounts Receivable for $539,000 
C) a debit to Sales Tax Payable for $59,290 
D) a debit to Accounts Receivable for $598,290

Exam 11: Current Liabilities and Payroll

Employer FICA is paid by the employer and recorded as a payroll tax expense.

Regarding net pay,which of the following statements is incorrect?

The Social Security system is funded by contributions from both the employer and employee.

Tryst,Inc.has a policy of accruing $2,400 for every employee as a vacation benefit.Sarah,an employee,took a vacation.Which of the following is the correct journal entry for the vacation benefit paid?

On June 30,2017,Nightvale,Inc.purchased merchandise inventory for $500,000 by signing a six-month,8% note payable.Prepare the journal entry for the payment of the note on December 30,2016.

Which of the following accounts is credited by the seller when tax is collected on retail sales?

Jupiter Services sells service plans for commercial computer maintenance.The price for each service plan is $1,650 per year,paid in advance.On October 1,2017,a service plan was sold to a new customer for cash.Prepare the journal entry to record this transaction.

Which of the following is included in the entry to record accrual of warranty expense?

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

Complete the table to show how each type of employee pay is generally stated.

On September 1,2017,Neighborhood,Inc.borrowed $125,000 by signing a nine-month,7.2% note payable.Prepare the journal entry to accrue interest expense on December 31,2016.

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

A high interest-coverage ratio indicates a company's difficulty in paying interest expense.

The current period earnings column of the payroll register only includes regular and overtime earnings.

A restaurant is being sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

Which of the following statements regarding vacation benefits is correct?

Sales revenue for a sporting goods store amounted to $539,000 for the current period.All sales are on account and are subject to a sales tax of 11%.Which of the following would be included in the journal entry to record the sales transaction?

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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