Question 1

Employers:

Accepted Answer

A)  Pay FICA taxes equal to the amount of FICA taxes withheld from the employees. 
B)  Withhold employees' FICA taxes. 
C)  Pay unemployment taxes to the federal government. 
D)  Pay unemployment taxes to both the state and federal governments. 
E)  All of these. 
A)  Pay FICA taxes equal to the amount of FICA taxes withheld from the employees. 
B)  Withhold employees' FICA taxes. 
C)  Pay unemployment taxes to the federal government. 
D)  Pay unemployment taxes to both the state and federal governments. 
E)  All of these. E

Question 2

A company sells computers with a 6-month warranty. In January, the company sold 100,000 computers at $1,750 each; and 1,500 computers were turned in for repairs during that same month. The total repairs amounted to $185,000 costs from the computer parts inventory. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

Accepted Answer

The answer of A company sells computers with a 6-month...

Question 3

All of the following statements regarding liabilities are except:

Accepted Answer

A)  A liability is a probable future payment of assets or services. 
B)  Unearned future wages to be paid to employees should be recorded as liabilities. 
C)  For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services. 
D)  Information about liabilities is more useful when the balance sheet identifies them as either current or long term. 
E)  All of these are True. 
A)  A liability is a probable future payment of assets or services. 
B)  Unearned future wages to be paid to employees should be recorded as liabilities. 
C)  For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services. 
D)  Information about liabilities is more useful when the balance sheet identifies them as either current or long term. 
E)  All of these are True. B

Question 4

A company's employees had the following earnings records at the close of the current payroll period:
The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $106,800 of earnings plus 1.45% FICA Medicare on all wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000. Compute the employer's total payroll taxes expense for the current pay period.

Accepted Answer

The answer of A company's employees had the following earnings...

Question 5

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 6

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Accepted Answer

At maturity: $60,000

Question 7

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Accepted Answer

A)  $322.00. 
B)  $434.00. 
C)  $480.60. 
D)  $551.80. 
E)  Zero, since the employee's wages exceed the maximum of $7,000. 
A)  $322.00. 
B)  $434.00. 
C)  $480.60. 
D)  $551.80. 
E)  Zero, since the employee's wages exceed the maximum of $7,000.

Question 8

Amounts received in advance from customers for future products or services:

Accepted Answer

A)  Are revenues. 
B)  Increase income. 
C)  Are liabilities. 
D)  Are not allowed under GAAP. 
E)  Require an outlay of cash in the future. 
A)  Are revenues. 
B)  Increase income. 
C)  Are liabilities. 
D)  Are not allowed under GAAP. 
E)  Require an outlay of cash in the future.

Question 9

A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance, $3,400 for federal income taxes, and $180 for union dues.
a. Prepare the general journal entry to accrue the payroll.
b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%. By May 15, some employees had earned over $7,000, so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

Accepted Answer

The answer of A company's payroll for the week ended...

Question 10

During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the estimated warranty expense for the month is:

Accepted Answer

A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800. 
B)  Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000. 
C)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400. 
D)  Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400. 
E)  Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800. 
A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800. 
B)  Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000. 
C)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400. 
D)  Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400. 
E)  Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800.

Question 11

The Wage and Tax Statement is:

Accepted Answer

A)  Form 940. 
B)  Form 941. 
C)  Form 1040. 
D)  Form W-2. 
E)  Form W-4. 
A)  Form 940. 
B)  Form 941. 
C)  Form 1040. 
D)  Form W-2. 
E)  Form W-4.

Question 12

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

Accepted Answer

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

Question 13

The full disclosure principle requires the reporting of contingent liabilities that are possible.

Accepted Answer

A) True 
 B)False

Question 14

Sales taxes payable:

Accepted Answer

A)  Is an estimated liability. 
B)  Is a contingent liability. 
C)  Is a current liability for retailers. 
D)  Is a business expense. 
E)  Is a long-term liability. 
A)  Is an estimated liability. 
B)  Is a contingent liability. 
C)  Is a current liability for retailers. 
D)  Is a business expense. 
E)  Is a long-term liability.

Question 15

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

Accepted Answer

A)  0.40 
B)  2.50 
C)  1:2.5 
D)  2.5:1 
E)  0.50 
A)  0.40 
B)  2.50 
C)  1:2.5 
D)  2.5:1 
E)  0.50

Question 16

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

Accepted Answer

Wage brack

Question 17

The times interest earned computation is:

Accepted Answer

A)  (Net income + Interest expense + Income taxes)/Interest expense. 
B)  (Net income + Interest expense - Income taxes)/Interest expense. 
C)  (Net income - Interest expense - Income taxes)/Interest expense. 
D)  (Net income - Interest expense + Income taxes)/Interest expense. 
E)  Interest expense/(Net income + Interest expense + Income taxes expense). 
A)  (Net income + Interest expense + Income taxes)/Interest expense. 
B)  (Net income + Interest expense - Income taxes)/Interest expense. 
C)  (Net income - Interest expense - Income taxes)/Interest expense. 
D)  (Net income - Interest expense + Income taxes)/Interest expense. 
E)  Interest expense/(Net income + Interest expense + Income taxes expense).

Question 18

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

Accepted Answer

The answer of Blake Company pays its employees for two...

Question 19

A merit rating:

Accepted Answer

A)  Is assigned by the state. 
B)  Reflects a company's stability or instability in employing workers. 
C)  Adjusts the employer's SUTA tax rate. 
D)  Affects state unemployment taxes paid by an employer. 
E)  All of these. 
A)  Is assigned by the state. 
B)  Reflects a company's stability or instability in employing workers. 
C)  Adjusts the employer's SUTA tax rate. 
D)  Affects state unemployment taxes paid by an employer. 
E)  All of these.

Question 20

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 of parts to perform the warranty work. Sales for June were $450,000.
1. Record the warranty expense for the month of June.
2. Record the costs of the warranty work completed in June.
3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30?

Accepted Answer

The answer of A company sells its product subject to...

Employers:

All of the following statements regarding liabilities are except:

A note payable can be used to extend the payment due on an account payable.

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Amounts received in advance from customers for future products or services:

The Wage and Tax Statement is:

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

The full disclosure principle requires the reporting of contingent liabilities that are possible.

Sales taxes payable:

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

The times interest earned computation is:

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

A merit rating:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

Exam 11: Current Liabilities and Payroll Accounting

Employers:

All of the following statements regarding liabilities are except:

A note payable can be used to extend the payment due on an account payable.

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Amounts received in advance from customers for future products or services:

The Wage and Tax Statement is:

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

The full disclosure principle requires the reporting of contingent liabilities that are possible.

Sales taxes payable:

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

The times interest earned computation is:

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

A merit rating:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters