Question 1

The matching principle requires businesses to report Warranty Expense ________.

Accepted Answer

A) in the same period that the company records the revenue related to that warranty 
B) in the period prior to which the company records the revenue related to that warranty 
C) in the period after the related revenue is recorded 
D) in the long-term assets section of the balance sheet 
A) in the same period that the company records the revenue related to that warranty 
B) in the period prior to which the company records the revenue related to that warranty 
C) in the period after the related revenue is recorded 
D) in the long-term assets section of the balance sheet A

Question 2

The following transactions of Windsor Enterprises occurred in 2016 and 2017:
   Journalize the transactions in Windsor's general journal.Explanations are not required.Round to the nearest dollar.

Accepted Answer

The answer of The following transactions of Windsor Enterprises occurred...

Question 3

Vacation,health,and pension benefits must be estimated and recorded as a liability.

Accepted Answer

A) True 
 B)False  True

Question 4

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

Accepted Answer

A) True 
 B)False

Question 5

The current period earnings column of the payroll register only includes regular and overtime earnings.

Accepted Answer

A) True 
 B)False

Question 6

David,an employee of Cecil,Inc. ,has gross salary for March of $5,900.The entire amount is under the OASDI limit of $117,000,and thus subject to FICA.He is also subject to federal income tax at a rate of 30%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The journal entry to record the employer's payroll tax expense includes a credit to FICA-OASDI Taxes Payable for $365.80.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. )

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a major control risk related to payroll?

Accepted Answer

A) theft of inventory by staff 
B) a dishonest employee cashing a paycheck that was written to a fictitious person 
C) expenses being recorded as assets in order to manipulate earnings 
D) contracts being awarded to relatives of employees 
A) theft of inventory by staff 
B) a dishonest employee cashing a paycheck that was written to a fictitious person 
C) expenses being recorded as assets in order to manipulate earnings 
D) contracts being awarded to relatives of employees

Question 8

Lawrence,an employee of Light,Inc. ,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $117,000,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Which of the following is a part of the journal entry to record the employer's payroll taxes?

Accepted Answer

A) debit to Payroll Tax Expense 
B) debit to FICA Taxes Payable 
C) credit to Payroll Tax Expense 
D) debit to Cash 
A) debit to Payroll Tax Expense 
B) debit to FICA Taxes Payable 
C) credit to Payroll Tax Expense 
D) debit to Cash

Question 9

Which of the following is an example of an estimable probable contingency?

Accepted Answer

A) FICA Taxes Payable 
B) Income Taxes Payable 
C) Warranty Payable 
D) Accounts Payable 
A) FICA Taxes Payable 
B) Income Taxes Payable 
C) Warranty Payable 
D) Accounts Payable

Question 10

The matching principle requires businesses to record Warranty Expense when the warranty costs are incurred.

Accepted Answer

A) True 
 B)False

Question 11

If the likelihood of a future event is reasonably possible,how should the company report the contingency?

Accepted Answer

Describe the situati

Question 12

Steve is an employee of Panache,Inc.Panache pays a portion of his health insurance premium and also contributes to a retirement plan in his name.The company's share of the health insurance premium is $600,and the company's contribution to the retirement plan is $860.The journal entry to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,460.

Accepted Answer

A) True 
 B)False

Question 13

Warranty Expense is shown on the income statement at the estimated amount.

Accepted Answer

A) True 
 B)False

Question 14

Cycle Haven,Inc.offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2017,the Estimated Warranty Payable account had a credit balance of $1,400.During the year,Cycle Haven had $299,000 in sales and had to pay out $5,900 in warranty payments.How much Warranty Expense will be reported on the 2017 income statement?

Accepted Answer

A) $5,965 
B) $7,300 
C) $9,065 
D) $10,465 
A) $5,965 
B) $7,300 
C) $9,065 
D) $10,465

Question 15

A restaurant is being sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility 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 situation should be described in a note to the financial statements. 
B) The possible liability should not be shown in the financial statements. 
C) The liability should be estimated and accrued as an expense. 
D) An expense must be matched to the period in which the incident occurred. 
A) The situation should be described in a note to the financial statements. 
B) The possible liability should not be shown in the financial statements. 
C) The liability should be estimated and accrued as an expense. 
D) An expense must be matched to the period in which the incident occurred.

Question 16

Main Street Restaurant incurred salaries expense of $60,000 for 2016.The payroll expense includes employer FICA tax,in addition to state unemployment tax and federal unemployment tax.Of the total salaries,$17,000 is subject to unemployment tax.Also,the company provides the following benefits for employees: health insurance (cost to the company,$2,500),life insurance (cost to the company,$700),and retirement benefits (cost to the company,10% of salaries expense).Journalize Main Street's expenses for employee benefits and for payroll taxes.Explanations are not required.

Accepted Answer

None

Question 17

Which of the following statements regarding vacation benefits is correct?

Accepted Answer

A) No entry is needed until the employee takes paid vacation. 
B) The account,Vacation Expense is debited when the employee takes paid vacation. 
C) Health and pension benefits are recorded in the same manner as vacation benefits. 
D) When an employee takes paid vacation,the account,Vacation Benefits Payable is credited. 
A) No entry is needed until the employee takes paid vacation. 
B) The account,Vacation Expense is debited when the employee takes paid vacation. 
C) Health and pension benefits are recorded in the same manner as vacation benefits. 
D) When an employee takes paid vacation,the account,Vacation Benefits Payable is credited.

Question 18

State unemployment compensation tax (SUTA)is paid by the employer and is not deducted from an employee's gross earnings.

Accepted Answer

A) True 
 B)False

Question 19

Aaron earns $24.00 per hour with time-and-a-half for hours in excess of 40 per week.He worked 50 hours at his job during the first week of March 2017.Aaron pays income taxes at 15% and 7.65% for OASDI and Medicare.All of his income is taxable under FICA.Determine Aaron's net pay for the week.

Accepted Answer

A) $1,122.00 
B) $1,021.02 
C) $835.80 
D) $799.80 
A) $1,122.00 
B) $1,021.02 
C) $835.80 
D) $799.80

Question 20

Eric's gross pay for the week is $2,150.His deduction for federal income tax is based on a rate of 25%.He has no voluntary deductions.His yearly pay is under the limit for OASDI.What is the amount of FICA tax that will be withheld from Eric's pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. )

Accepted Answer

A) $537.50 
B) $164.48 
C) $701.98 
D) $136.50 
A) $537.50 
B) $164.48 
C) $701.98 
D) $136.50

Exam 11: Current Liabilities and Payroll

The matching principle requires businesses to report Warranty Expense ________.

The following transactions of Windsor Enterprises occurred in 2016 and 2017: Journalize the transactions in Windsor's general journal.Explanations are not required.Round to the nearest dollar.

Vacation,health,and pension benefits must be estimated and recorded as a liability.

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

The current period earnings column of the payroll register only includes regular and overtime earnings.

Which of the following is a major control risk related to payroll?

Which of the following is an example of an estimable probable contingency?

The matching principle requires businesses to record Warranty Expense when the warranty costs are incurred.

If the likelihood of a future event is reasonably possible,how should the company report the contingency?

Warranty Expense is shown on the income statement at the estimated amount.

A restaurant is being sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

Which of the following statements regarding vacation benefits is correct?

State unemployment compensation tax (SUTA)is paid by the employer and is not deducted from an employee's gross earnings.

Aaron earns $24.00 per hour with time-and-a-half for hours in excess of 40 per week.He worked 50 hours at his job during the first week of March 2017.Aaron pays income taxes at 15% and 7.65% for OASDI and Medicare.All of his income is taxable under FICA.Determine Aaron's net pay for the week.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Accounting Information Systems

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