Question 1

________ is pay stated as a percentage of a sale amount.

Accepted Answer

A)  Salary 
B)  Wage 
C)  Commission 
D)  Bonus 
A)  Salary 
B)  Wage 
C)  Commission 
D)  Bonus C

Question 2

Isabelle's gross pay for the week is $850. Her deduction for federal income tax is based on a rate of 19%. She has voluntary deductions of $135. Her yearly pay is under the limit for OASDI. What is the amount of FICA-Medicare Tax deducted from her pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

Accepted Answer

A)  $198.03 
B)  $12.33 
C)  $96.47 
D)  $209.53 
A)  $198.03 
B)  $12.33 
C)  $96.47 
D)  $209.53 B

Question 3

Barter Company sold goods for $875,500 on account. The company operates in a state that imposes a 6% sales tax. Which of the following would be the amount of the sales tax payable to the state?

Accepted Answer

A)  $52,530 
B)  $50,540 
C)  $45,300 
D)  $55,090 
A)  $52,530 
B)  $50,540 
C)  $45,300 
D)  $55,090 A

Question 4

The information related to Stereo Music is given below:
 $$\begin{array} { | l | r | r | } 
\hline & \begin{array} { c } 
\text { Year ended } \
\text { December } 31,2012
\end{array} & \begin{array} { c } 
\text { Year ended } \
\text { December } 31,2013
\end{array} \
\hline \text { Net Income } & \$ 81,510 & \$ 210,570 \
\hline \text { Income Tax Expense } & 55,910 & 103,505 \
\hline \text { Interest Expense } & 6,595 & 59,505 \
\hline
\end{array}$$ Calculate the times-interest-earned ratio for each year and also state the percentage change in the ratio.

Accepted Answer

The answer of The information related to Stereo Music is...

Question 5

Jane Services sells a service plan for commercial computer maintenance. The price is $1,350 per year, paid in advance. On October 1, 2015, Jane sells a service plan to a new customer for cash, and the plan covers the period October 1, 2015 to September 30, 2016. Provide the journal entry to record the adjustment needed on December 31, 2015.

Accepted Answer

\[\begin{array} { | c | r | r

Question 6

Felix Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3.5% of sales revenue. In 2015, Felix had $333,000 of sales. In the same year, Felix paid out $8,750 of warranty payments. Provide the journal entry to record the disbursement of warranty payments.

Accepted Answer

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Question 7

Which of the following taxes has a ceiling on the amount of annual earnings subject to tax?

Accepted Answer

A)  FICA-OASDI taxes 
B)  Sales Tax 
C)  Federal income tax 
D)  FICA-Medicare taxes 
A)  FICA-OASDI taxes 
B)  Sales Tax 
C)  Federal income tax 
D)  FICA-Medicare taxes

Question 8

Berkley's gross pay for the month is $5,400. His deduction for federal income tax is based on a rate of 18%. He has no voluntary deductions. His yearly pay is under the limit for OASDI. What is the amount of Berkley's net pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

Accepted Answer

A)  $4,122.90 
B)  $5,400.00 
C)  $5,094.90 
D)  $4,428.00 
A)  $4,122.90 
B)  $5,400.00 
C)  $5,094.90 
D)  $4,428.00

Question 9

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

Accepted Answer

A) True 
 B)False

Question 10

The journal entry in the payroll cycle to record employer's payroll tax expense will include a debit to Employee Income Taxes Payable.

Accepted Answer

A) True 
 B)False

Question 11

The liability section of the balance sheet does not include Warranty Expense.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following accounts will be credited by the borrower when a promissory note is issued?

Accepted Answer

A)  Note Payable 
B)  Note Receivable 
C)  Interest Payable 
D)  Cash 
A)  Note Payable 
B)  Note Receivable 
C)  Interest Payable 
D)  Cash

Question 13

Investors use the times-interest-earned ratio to evaluate a business's ability to pay interest expense.

Accepted Answer

A) True 
 B)False

Question 14

Gross pay is the total amount of compensation earned by an employee, after the deductions are made.

Accepted Answer

A) True 
 B)False

Question 15

When a company co-signs a note payable for another entity, a current liability must be recorded.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

Accepted Answer

A)  unearned revenue 
B)  accrued liability 
C)  accounts payable 
D)  estimated warranty payable 
A)  unearned revenue 
B)  accrued liability 
C)  accounts payable 
D)  estimated warranty payable

Question 17

Applied Foods had cash sales of $598,000 during the month of August. Sales taxes of 6.5% were collected on the sales. Prepare a compound journal entry to record the sales revenue and sales tax for the month.

Accepted Answer

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\hlin

Question 18

A high interest-coverage ratio indicates a business's difficulty in paying interest expense.

Accepted Answer

A) True 
 B)False

Question 19

Employer FICA tax is a tax paid by the employer and is added to the employee's pay.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll

________ is pay stated as a percentage of a sale amount.

Barter Company sold goods for $875,500 on account. The company operates in a state that imposes a 6% sales tax. Which of the following would be the amount of the sales tax payable to the state?

Felix Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3.5% of sales revenue. In 2015, Felix had $333,000 of sales. In the same year, Felix paid out $8,750 of warranty payments. Provide the journal entry to record the disbursement of warranty payments.

Which of the following taxes has a ceiling on the amount of annual earnings subject to tax?

Berkley's gross pay for the month is $5,400. His deduction for federal income tax is based on a rate of 18%. He has no voluntary deductions. His yearly pay is under the limit for OASDI. What is the amount of Berkley's net pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

The journal entry in the payroll cycle to record employer's payroll tax expense will include a debit to Employee Income Taxes Payable.

The liability section of the balance sheet does not include Warranty Expense.

Which of the following accounts will be credited by the borrower when a promissory note is issued?

Investors use the times-interest-earned ratio to evaluate a business's ability to pay interest expense.

Gross pay is the total amount of compensation earned by an employee, after the deductions are made.

When a company co-signs a note payable for another entity, a current liability must be recorded.

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

Applied Foods had cash sales of $598,000 during the month of August. Sales taxes of 6.5% were collected on the sales. Prepare a compound journal entry to record the sales revenue and sales tax for the month.

A high interest-coverage ratio indicates a business's difficulty in paying interest expense.

Employer FICA tax is a tax paid by the employer and is added to the employee's pay.

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

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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