Question 1

A contingent liability that will probably become an actual liability,and can be reasonably estimated,must be recorded as an expense.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following are pay amounts stated at an hourly rate?

Accepted Answer

A)  Bonuses 
B)  Commissions 
C)  Wages 
D)  Benefits 
A)  Bonuses 
B)  Commissions 
C)  Wages 
D)  Benefits C

Question 3

Which of the following is TRUE of a contingent liability?

Accepted Answer

A)  It is a potential liability that depends on a future event. 
B)  It is an actual liability that is difficult to estimate. 
C)  It is an actual liability that depends on a past event. 
D)  It is a liability resulting from a lawsuit settled in court. 
A)  It is a potential liability that depends on a future event. 
B)  It is an actual liability that is difficult to estimate. 
C)  It is an actual liability that depends on a past event. 
D)  It is a liability resulting from a lawsuit settled in court. A

Question 4

If a note payable has installments due within a year,the entire note is treated as a current liability.

Accepted Answer

A) True 
 B)False

Question 5

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.The second entry in the payroll cycle to record the disbursement of his net pay should include which of the following?

Accepted Answer

A)  Debit to Cash for $2,974 
B)  Credit to Cash for $2,974 
C)  Debit to Employee income tax payable of $720 
D)  Debit to FICA tax payable of $306 
A)  Debit to Cash for $2,974 
B)  Credit to Cash for $2,974 
C)  Debit to Employee income tax payable of $720 
D)  Debit to FICA tax payable of $306

Question 6

State and federal unemployment taxes are withheld from each employee's paycheck.

Accepted Answer

A) True 
 B)False

Question 7

A company 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 8

Which of the following occurs when a company records accrued interest expense on a note payable?

Accepted Answer

A)  Interest expense is credited. 
B)  Note payable is credited. 
C)  Cash is debited. 
D)  Interest payable is credited. 
A)  Interest expense is credited. 
B)  Note payable is credited. 
C)  Cash is debited. 
D)  Interest payable is credited.

Question 9

Ace Appliances sells dishwashers with a 3-year warranty.In 2013,there are $90,000 of sales revenues for dishwashers.The company estimates warranty expense at 3% of revenues.What is the total estimated warranty payable for Ace regarding the sales in 2013?

Accepted Answer

A)  $2,700 
B)  $600 
C)  $1,400 
D)  $3,000 
A)  $2,700 
B)  $600 
C)  $1,400 
D)  $3,000

Question 10

On March 1,2012,Archer Sales purchases inventory for $200,000 by signing a note payable.The note is for 3 months and bears interest at a rate of 9%.Please provide the journal entry for this transaction.
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\hline \quad\quad& \quad&\quad \
\hline & & \
\hline
\end{array}$$

Accepted Answer

This question is no

Question 11

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

Accepted Answer

A)  Consistency principle 
B)  Matching principle 
C)  Revenue principle 
D)  Materiality concept 
A)  Consistency principle 
B)  Matching principle 
C)  Revenue principle 
D)  Materiality concept

Question 12

A $20,000,3-month,8% note payable was issued on November 1,2015.What is the amount of interest expense recorded in the year 2016?

Accepted Answer

A)  $800 
B)  $133 
C)  $200 
D)  $267 
A)  $800 
B)  $133 
C)  $200 
D)  $267

Question 13

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.The total amount of FICA that will be recorded as company expense totals $612.

Accepted Answer

A) True 
 B)False

Question 14

Ensuring efficiency of the payroll process is one of the two key controls for payroll.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following are NOT required to be deducted from employees' paychecks?

Accepted Answer

A)  Federal income tax 
B)  FICA 
C)  State income tax 
D)  Charitable contributions 
A)  Federal income tax 
B)  FICA 
C)  State income tax 
D)  Charitable contributions

Question 16

Which of the following correctly describes Interest payable?

Accepted Answer

A)  Interest payable is shown on the balance sheet as a current liability. 
B)  Interest payable is shown on the income statement as an operating expense. 
C)  Interest payable is shown on the balance sheet as a current asset. 
D)  Interest payable is shown on the balance sheet as a long-term liability. 
A)  Interest payable is shown on the balance sheet as a current liability. 
B)  Interest payable is shown on the income statement as an operating expense. 
C)  Interest payable is shown on the balance sheet as a current asset. 
D)  Interest payable is shown on the balance sheet as a long-term liability.

Question 17

FICA tax is a tax which is paid by the employer only and is not deducted from the employee's pay.

Accepted Answer

A) True 
 B)False

Question 18

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Please provide the fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \\hline \
\hline
\end{array}$$

Accepted Answer

Calculations:
$4,000 × 18% =

Question 19

Sue works 46 hours at her job during the week.She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.Sue is taxed for federal income taxes at 15% and 7.65% for OASDI and Medicare.All of her income is taxable.What is Sue's net pay?

Accepted Answer

A)  $651.70 
B)  $147.61 
C)  $504.08 
D)  $532.00 
A)  $651.70 
B)  $147.61 
C)  $504.08 
D)  $532.00

Question 20

Franconia Sales offers warranties on all their electronic goods.Warranty expense is estimated at 2% of sales revenue.In 2013,Franconia had $500,000 of sales.In the same year,Franconia paid out $7,500 of warranty payments.
-Which of the following is the entry needed to record the disbursement of warranty payments?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Estimated warranty payable } & 7,500 & \
\hline \text { Cash } & & 7,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Warranty expense } & 7,500 & \
\hline \text { Estimated warranty payable } & & 7,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Estimated warranty payable } & & 10,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Sales revenue } & & 10,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Estimated warranty payable } & 7,500 & \
\hline \text { Cash } & & 7,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Warranty expense } & 7,500 & \
\hline \text { Estimated warranty payable } & & 7,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Estimated warranty payable } & & 10,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Warranty expense } & 10,000 & \
\hline \text { Sales revenue } & & 10,000 \
\hline
\end{array}$$

A contingent liability that will probably become an actual liability,and can be reasonably estimated,must be recorded as an expense.

Which of the following are pay amounts stated at an hourly rate?

Which of the following is TRUE of a contingent liability?

If a note payable has installments due within a year,the entire note is treated as a current liability.

State and federal unemployment taxes are withheld from each employee's paycheck.

Which of the following occurs when a company records accrued interest expense on a note payable?

Ace Appliances sells dishwashers with a 3-year warranty.In 2013,there are $90,000 of sales revenues for dishwashers.The company estimates warranty expense at 3% of revenues.What is the total estimated warranty payable for Ace regarding the sales in 2013?

On March 1,2012,Archer Sales purchases inventory for $200,000 by signing a note payable.The note is for 3 months and bears interest at a rate of 9%.Please provide the journal entry for this transaction.

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

A $20,000,3-month,8% note payable was issued on November 1,2015.What is the amount of interest expense recorded in the year 2016?

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.The total amount of FICA that will be recorded as company expense totals $612.

Ensuring efficiency of the payroll process is one of the two key controls for payroll.

Which of the following are NOT required to be deducted from employees' paychecks?

Which of the following correctly describes Interest payable?

FICA tax is a tax which is paid by the employer only and is not deducted from the employee's pay.

Sue works 46 hours at her job during the week.She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.Sue is taxed for federal income taxes at 15% and 7.65% for OASDI and Medicare.All of her income is taxable.What is Sue's net pay?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 10: Current Liabilities and Payroll

A contingent liability that will probably become an actual liability,and can be reasonably estimated,must be recorded as an expense.

Which of the following are pay amounts stated at an hourly rate?

Which of the following is TRUE of a contingent liability?

If a note payable has installments due within a year,the entire note is treated as a current liability.

State and federal unemployment taxes are withheld from each employee's paycheck.

Which of the following occurs when a company records accrued interest expense on a note payable?

Ace Appliances sells dishwashers with a 3-year warranty.In 2013,there are $90,000 of sales revenues for dishwashers.The company estimates warranty expense at 3% of revenues.What is the total estimated warranty payable for Ace regarding the sales in 2013?

On March 1,2012,Archer Sales purchases inventory for $200,000 by signing a note payable.The note is for 3 months and bears interest at a rate of 9%.Please provide the journal entry for this transaction.

Which of the following principles requires that warranty expense be recorded in the period that revenue is recorded?

A $20,000,3-month,8% note payable was issued on November 1,2015.What is the amount of interest expense recorded in the year 2016?

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.The total amount of FICA that will be recorded as company expense totals $612.

Ensuring efficiency of the payroll process is one of the two key controls for payroll.

Which of the following are NOT required to be deducted from employees' paychecks?

Which of the following correctly describes Interest payable?

FICA tax is a tax which is paid by the employer only and is not deducted from the employee's pay.

Sue works 46 hours at her job during the week.She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.Sue is taxed for federal income taxes at 15% and 7.65% for OASDI and Medicare.All of her income is taxable.What is Sue's net pay?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters