Question 1

A high value for the times interest earned ratio means that a company is a higher risk borrower.

Accepted Answer

A) True 
 B)False

Question 2

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 3

A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

Accepted Answer

A) True 
 B)False

Question 4

Halo Company provides you with following information for two of its employees. The company is subject to the following taxes.   Compute amounts for each of these four taxes as applied to each employee's gross earnings for November.

Accepted Answer

The answer of Halo Company provides you with following information...

Question 5

The difference between the amount borrowed and the amount repaid is referred to as _____________.

Accepted Answer

The answer of The difference between the amount borrowed and...

Question 6

A company's income before interest expense and income taxes in 2010 and 2011 is $395,000 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Accepted Answer

The answer of A company's income before interest expense and...

Question 7

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Accepted Answer

A)  W-4. 
B)  Form 941. 
C)  Form 1040. 
D)  Form 1099. 
E)  All of these. 
A)  W-4. 
B)  Form 941. 
C)  Form 1040. 
D)  Form 1099. 
E)  All of these.

Question 8

A company's employer payroll tax rates are 0.8% for federal unemployment taxes, 5.4% for state unemployment taxes, 6.2% for FICA social security taxes on earnings up to $106,800, and 1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement information required below for the following employees:

Accepted Answer

The answer of A company's employer payroll tax rates are...

Question 9

Each employee records the number of withholding allowances claimed on form W-4, which is the withholding allowance certificate that is filed with the employer.

Accepted Answer

A) True 
 B)False

Question 10

Maryland Company offers a bonus plan to its employees equal to 3% of net income. Maryland's net income is expected to be $960,000. The amount of the employee bonus expense is estimated to be

Accepted Answer

A)  $27,961 
B)  $28,800 
C)  $29,000 
D)  $29,691 
E)  $30,000 
A)  $27,961 
B)  $28,800 
C)  $29,000 
D)  $29,691 
E)  $30,000

Question 11

A payroll register is a cumulative record of an employee's hours worked, gross earnings, deductions, and net pay.

Accepted Answer

A) True 
 B)False

Question 12

Since income tax expense is created by earning income, a liability is incurred when income is earned.

Accepted Answer

A) True 
 B)False

Question 13

______________ are amounts owed to suppliers for products or services purchased on credit.

Accepted Answer

Trade acco

Question 14

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

Accepted Answer

A) True 
 B)False

Question 15

A _______________________ 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.

Accepted Answer

Short-term

Question 16

If the times interest ratio:

Accepted Answer

A)  Increases, then risk increases. 
B)  Increases, then risk decreases. 
C)  Is greater than 1.5, then the company is in default. 
D)  Is less than 1.5, the company is carrying too little debt. 
E)  Is greater than 3.0, the company is likely carrying too much debt. 
A)  Increases, then risk increases. 
B)  Increases, then risk decreases. 
C)  Is greater than 1.5, then the company is in default. 
D)  Is less than 1.5, the company is carrying too little debt. 
E)  Is greater than 3.0, the company is likely carrying too much debt.

Question 17

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

Accepted Answer

A)  Debit Warranty Expense $7,400; credit Sales $7,400. 
B)  Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. 
C)  Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400. 
D)  Debit Estimated Warranty Liability $7,400; credit Cash $7,400. 
E)  No entry is recorded until the items are returned for warranty repairs. 
A)  Debit Warranty Expense $7,400; credit Sales $7,400. 
B)  Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. 
C)  Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400. 
D)  Debit Estimated Warranty Liability $7,400; credit Cash $7,400. 
E)  No entry is recorded until the items are returned for warranty repairs.

Question 18

Employers' responsibilities for payroll include:

Accepted Answer

A)  Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld. 
B)  Filing Form 941, the Employer's Quarterly Federal Tax Return. 
C)  Filing Form 940, the Annual Federal Unemployment Tax Return. 
D)  Maintaining individual earnings records for each employee. 
E)  All of these. 
A)  Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld. 
B)  Filing Form 941, the Employer's Quarterly Federal Tax Return. 
C)  Filing Form 940, the Annual Federal Unemployment Tax Return. 
D)  Maintaining individual earnings records for each employee. 
E)  All of these.

Question 19

When the number of withholding allowances claimed on Form W-4 increases, the amount of income tax withheld increases.

Accepted Answer

A) True 
 B)False

Question 20

A contingent liability is a potential obligation that depends on a future event arising from a future transaction or event.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

A high value for the times interest earned ratio means that a company is a higher risk borrower.

A note payable can be used to extend the payment due on an account payable.

A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

Halo Company provides you with following information for two of its employees. The company is subject to the following taxes. Compute amounts for each of these four taxes as applied to each employee's gross earnings for November.

The difference between the amount borrowed and the amount repaid is referred to as _____________.

A company's income before interest expense and income taxes in 2010 and 2011 is $395,000 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Each employee records the number of withholding allowances claimed on form W-4, which is the withholding allowance certificate that is filed with the employer.

Maryland Company offers a bonus plan to its employees equal to 3% of net income. Maryland's net income is expected to be $960,000. The amount of the employee bonus expense is estimated to be

A payroll register is a cumulative record of an employee's hours worked, gross earnings, deductions, and net pay.

Since income tax expense is created by earning income, a liability is incurred when income is earned.

______________ are amounts owed to suppliers for products or services purchased on credit.

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

A _______________________ 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.

If the times interest ratio:

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

Employers' responsibilities for payroll include:

When the number of withholding allowances claimed on Form W-4 increases, the amount of income tax withheld increases.

A contingent liability is a potential obligation that depends on a future event arising from a future transaction or event.

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 Resources, and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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