Question 1

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Accepted Answer

A)  Current liabilities. 
B)  Long-term liabilities. 
C)  Bills. 
D)  Operating cycle liabilities. 
E)  Current assets.

Question 2

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

Accepted Answer

The answer of Contingent liabilities are recorded in the accounts...

Question 3

During the first week of January, an employee works 46 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $16 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $80 in federal income taxes withheld. 
-What is the amount of this employee's gross pay for the first week of January?

Accepted Answer

A)  $784 
B)  $1,156 
C)  $1,004 
D)  $736 
E)  $1,104

Question 4

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 5

Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year, and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70.
- What is the total amount of taxes withheld from the Trey's earnings?

Accepted Answer

A)  $1,027.86 
B)  $680.70 
C)  $1,375.02 
D)  $746.50 
E)  $962.06

Question 6

The wage bracket withholding table is used to:

Accepted Answer

A)  Compute Medicare withholding. 
B)  Compute unemployment taxes. 
C)  Prepare the W-4. 
D)  Compute social security withholding. 
E)  Compute federal income tax withholding.

Question 7

If a company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers, the receipt of cash would be journalized as:

Accepted Answer

A)  Debit Cash $45,000, credit Sales $45,000. 
B)  Debit Sales $45,000, credit Unearned Revenue $45,000. 
C)  Debit Prepaid Subscriptions $45,000, credit Sales $45,000. 
D)  Debit Unearned Revenue $45,000; credit Sales $45,000. 
E)  Debit Cash $45,000; credit Unearned Revenue $45,000.

Question 8

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. 
-What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Accepted Answer

A)  Debit Cash $7,650; credit Interest Revenue $150; credit Notes Receivable $7,500. 
B)  Debit Notes Payable $7,500; credit Cash $7,500. 
C)  Debit Notes Payable $7,500; credit Interest Expense $150; credit Cash $7,350. 
D)  Debit Notes Payable $7,500; debit Interest Expense $150; credit Cash $7,650. 
E)  Debit Notes Payable $7,650; credit Cash $7,650.

Question 9

A company's income before interest expense and income taxes is $302,400, and its interest expense is $62,000. Calculate the company's times interest earned ratio.

Accepted Answer

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

Question 10

Sales Taxes Payable is debited and Cash is credited when companies send sales taxes collected from customers to the government.

Accepted Answer

A) True 
 B)False

Question 11

The employer should record deductions from employee pay as:

Accepted Answer

A)  Employee receivables. 
B)  Employee payables. 
C)  Payroll taxes. 
D)  Current liabilities. 
E)  Wages payable.

Question 12

Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July?

Accepted Answer

A)  $25,000 
B)  $250 
C)  $2,500 
D)  $25 
E)  $100

Question 13

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Accepted Answer

A) True 
 B)False

Question 14

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

Accepted Answer

A)  $2,830.50. 
B)  $1,757.50. 
C)  $8,950.50. 
D)  $536.50. 
E)  $2,294.00.

Question 15

A company cannot have a liability if the amount of the obligation is unknown.

Accepted Answer

A) True 
 B)False

Question 16

Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Accepted Answer

A)  Debit to Medical Insurance Payable $5,000. 
B)  Debit to Employee Benefits Expense $11,000. 
C)  Credit to Employee Benefits Expense $11,000. 
D)  Debit to Employee Retirement Program Payable $6,000. 
E)  Debit to Payroll Taxes Expense $11,000.

Question 17

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 18

The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. 
-What is the amount of FICA - Medicare withheld from this employee for the month of June?

Accepted Answer

A)  $1,240.00 
B)  $7,347.00 
C)  $290.00 
D)  $1,147.00 
E)  $268.25

Question 19

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Accepted Answer

A) True 
 B)False

Question 20

Floral Depot's income before interest expense and income taxes was $5,900 million, and interest expense was $38 million. Calculate Floral Depot's times interest earned.

Accepted Answer

The answer of Floral Depot's income before interest expense and...

Exam 11: Current Liabilities and Payroll Accounting

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Contingent liabilities are recorded in the accounts if the future event is and the amount owed can be .

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

The wage bracket withholding table is used to:

If a company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers, the receipt of cash would be journalized as:

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. -What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

A company's income before interest expense and income taxes is $302,400, and its interest expense is $62,000. Calculate the company's times interest earned ratio.

Sales Taxes Payable is debited and Cash is credited when companies send sales taxes collected from customers to the government.

The employer should record deductions from employee pay as:

Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July?

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

A company cannot have a liability if the amount of the obligation is unknown.

Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Floral Depot's income before interest expense and income taxes was $5,900 million, and interest expense was $38 million. Calculate Floral Depot's times interest earned.