Exam 15: Accounting Principles and Contingent Liabilities in Business Operations

In a finance lease, the amount capitalized is the

An operating lease transfers substantially all the benefits and risks of ownership to the lessee.

The process of determining the present value is referred to as _________________ the future amount.

An employee earnings record is a cumulative record of each employee's gross earnings, deductions, and net pay during the year.

Jerri Rice has worked 44 hours this week. She worked in excess of 8 hours each day. Her regular hourly wage is $12 per hour. What are Jerri's gross wages for the week? (The company Jerri works for is in compliance with the Fair Labor Standards Act.)

An employee's net pay consists of gross pay less mandatory and voluntary payroll deductions. Identify the mandatory payroll deductions and give two or three examples of common voluntary deductions. Are these deductions recognized as payroll expenses by the employer? What type of payroll expenses does the employer incur related to having a payroll?

If $40,000 is deposited in a savings account paying interest of 4% compounded annually, what amount will be in the account at the end of 5 years?

Match the items below by entering the appropriate code letter in the space provided.

The accounting for warranty cost is based on the expense recognition principle, which requires that the estimated cost of honoring warranty contracts should be recognized as an expense

Perdue Company has purchased equipment that requires annual payments of $30,000 to be paid at the end of each of the next 6 years. The appropriate discount rate is 12%. What amount will be used to record the equipment?

Which of the following is not a special journal?

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

Sarah Denny purchased an investment for $40,260.48. From this investment, she will receive $6,000 annually for the next 10 years starting one year from now. What rate of interest will Sarah be earning on her investment?

If an event may become an actual liability in the future, it is called a

Hazel Company has just purchased equipment that requires annual payments of $40,000 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15%. What is the present value of the payments?

Roberts Company is preparing monthly adjusting entries at December 31. An analysis reveals the following: 1. During December, Roberts Company sold 3,000 units of a product that carries a 60-day warranty. The sales for this product totaled $100,000. The company expects 4% of the units to need repair under the warranty and it estimates that the average repair cost per unit will be $25. 2. The company has been sued by a disgruntled employee. Legal counsel believes that it is possible that the company will have to pay $200,000 in damages. 3. The company has been named as one of several defendants in a $400,000 damage suit. Legal counsel believes it is unlikely that the company will have to pay any damages. 4. Employees earn vacation pay at a rate of 1 day per month. During December, ten employees qualify for vacation pay. Their average daily wage is $80 per employee. Instructions Prepare adjusting entries, if required, for each of the four items.

Tuber Company issued $2,000,000, 10%, 2-year bonds which pay interest semiannually. Compute the amount at which the bonds would sell if investors required a rate of return of 8%.

The employer incurs a payroll tax expense equal to the amount contributed by each employee for ______________ taxes.

Larson Company has twenty employees who each earn $120 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued at the end of the month is

The paid absence that is most commonly accrued is