Question 1

If a company uses a special payroll bank account:

Accepted Answer

A)  The company does not need to issue paychecks. 
B)  The company draws one check for the entire payroll on the regular bank account and deposits it in the payroll bank account. 
C)  The company must use a federal depository bank for the payroll bank account. 
D)  There is no need for a payroll register. 
E)  There is no need to issue W-2's. 
A)  The company does not need to issue paychecks. 
B)  The company draws one check for the entire payroll on the regular bank account and deposits it in the payroll bank account. 
C)  The company must use a federal depository bank for the payroll bank account. 
D)  There is no need for a payroll register. 
E)  There is no need to issue W-2's.

Question 2

Contingent liabilities can be:

Accepted Answer

A)  Probable. 
B)  Remote. 
C)  Possible. 
D)  Estimable. 
E)  All of these. 
A)  Probable. 
B)  Remote. 
C)  Possible. 
D)  Estimable. 
E)  All of these.

Question 3

Debt guarantees:

Accepted Answer

A)  Are never disclosed in the financial statements. 
B)  Are considered to be a contingent liability. 
C)  Are a bad business practice. 
D)  Are recorded as a liability even though it is highly unlikely that the original debtor will default. 
E)  All of these. 
A)  Are never disclosed in the financial statements. 
B)  Are considered to be a contingent liability. 
C)  Are a bad business practice. 
D)  Are recorded as a liability even though it is highly unlikely that the original debtor will default. 
E)  All of these.

Question 4

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 5

FICA taxes include:

Accepted Answer

A)  Social Security taxes. 
B)  Charitable giving. 
C)  Employee income taxes. 
D)  Unemployment taxes. 
E)  All of these. 
A)  Social Security taxes. 
B)  Charitable giving. 
C)  Employee income taxes. 
D)  Unemployment taxes. 
E)  All of these.

Question 6

A company has 90 employees and a weekly payroll of $117,000. The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%. The total withholding for federal income tax is $16,500 for the current week. Calculate the amount of FICA taxes owed (assuming no employee's salary is over the FICA limit) and prepare the journal entry to accrue this week's salaries expense and withholdings.

Accepted Answer

The answer of A company has 90 employees and a...

Question 7

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 8

On November 1, Carter Company signed a 120-day, 10% note payable, with a face value of $9,000. What is the maturity value of the note on March 1?

Accepted Answer

A)  $9,000 
B)  $9,100 
C)  $9,150 
D)  $9,200 
E)  $9,300 
A)  $9,000 
B)  $9,100 
C)  $9,150 
D)  $9,200 
E)  $9,300

Question 9

Pastimes Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $850,000. Prepare the general journal entry to record the employee bonus plan expense.

Accepted Answer

B = 0.02($850,000 -

Question 10

An employee earned $4,300 working for an employer. The current rate for FICA Social Security is 6.2% and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Accepted Answer

A)  $62.35. 
B)  $266.60. 
C)  $328.95. 
D)  $657.90. 
E)  Zero, since the FICA tax is a deduction from an employee's pay, and not an employer tax. 
A)  $62.35. 
B)  $266.60. 
C)  $328.95. 
D)  $657.90. 
E)  Zero, since the FICA tax is a deduction from an employee's pay, and not an employer tax.

Question 11

Salary expense represents net pay which is pay after deductions for contributions and other deductions.

Accepted Answer

A) True 
 B)False

Question 12

Arena Sports receives $31,680,000 cash in advance ticket sales for 11 home games. Record the advance ticket sales on March 31. Record the revenue earned for the first home game played on August 17.

Accepted Answer

The answer of Arena Sports receives $31,680,000 cash in advance...

Question 13

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 14

Phil Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the amount of the employer's annual payroll taxes expenses for this employee?

Accepted Answer

A)  $56.00 
B)  $120.18 
C)  $378.00 
D)  $513.86 
E)  $1,068.04 
A)  $56.00 
B)  $120.18 
C)  $378.00 
D)  $513.86 
E)  $1,068.04

Question 15

A special bank account used solely for the purpose of paying employees, by depositing in the account each pay period an amount equal to the total employees' net pay and drawing the employees' payroll checks on the account, is a(n):

Accepted Answer

A)  Federal depository bank account. 
B)  Employee's Individual Earnings account. 
C)  Employees' bank account. 
D)  Payroll register account. 
E)  Payroll bank account. 
A)  Federal depository bank account. 
B)  Employee's Individual Earnings account. 
C)  Employees' bank account. 
D)  Payroll register account. 
E)  Payroll bank account.

Question 16

The times interest earned ratio reflects:

Accepted Answer

A)  A company's ability to pay its operating expenses on time. 
B)  A company's ability to pay interest even if sales decline. 
C)  A company's profitability. 
D)  The relation between income and debt. 
E)  The relation between assets and liabilities. 
A)  A company's ability to pay its operating expenses on time. 
B)  A company's ability to pay interest even if sales decline. 
C)  A company's profitability. 
D)  The relation between income and debt. 
E)  The relation between assets and liabilities.

Question 17

A company sold $12,000 worth of trampolines with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

Accepted Answer

A)  Consider the warranty expense a remote liability since the rate is only 2%. 
B)  Recognize warranty expense at the time the warranty work is performed. 
C)  Recognize warranty expense and liability in the year of the sale. 
D)  Consider the warranty expense a contingent liability. 
E)  Recognize warranty liability when the company purchases the trampolines. 
A)  Consider the warranty expense a remote liability since the rate is only 2%. 
B)  Recognize warranty expense at the time the warranty work is performed. 
C)  Recognize warranty expense and liability in the year of the sale. 
D)  Consider the warranty expense a contingent liability. 
E)  Recognize warranty liability when the company purchases the trampolines.

Question 18

Sales taxes payable is credited and cash is debited when companies send sales taxes collected from customers to the government.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

If a company uses a special payroll bank account:

Contingent liabilities can be:

Debt guarantees:

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

FICA taxes include:

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

On November 1, Carter Company signed a 120-day, 10% note payable, with a face value of $9,000. What is the maturity value of the note on March 1?

Pastimes Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $850,000. Prepare the general journal entry to record the employee bonus plan expense.

An employee earned $4,300 working for an employer. The current rate for FICA Social Security is 6.2% and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Salary expense represents net pay which is pay after deductions for contributions and other deductions.

Arena Sports receives $31,680,000 cash in advance ticket sales for 11 home games. Record the advance ticket sales on March 31. Record the revenue earned for the first home game played on August 17.

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.

A special bank account used solely for the purpose of paying employees, by depositing in the account each pay period an amount equal to the total employees' net pay and drawing the employees' payroll checks on the account, is a(n):

The times interest earned ratio reflects:

A company sold $12,000 worth of trampolines with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

Sales taxes payable is credited and cash is debited when companies send sales taxes collected from customers to the government.

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

Long-Term Assets

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

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

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