Question 1

A future commitment is not considered a liability unless a present obligation also exists.

Accepted Answer

A) True 
 B)False  True

Question 2

For small employers with perfect payroll deduction records, withholdings must be reported and remitted to the government

Accepted Answer

A)   monthly.
B)   annually.
C)   quarterly.
D)   bi-weekly. C

Question 3

Duane Herman sells Instructions
a) Prepare the journal entry to record the repairs made under warranty.
b) Prepare the journal entry to record the estimated warranty expense for the year. Determine the balance in the Warranty Liability account at the end of the year.

Accepted Answer

The balance in Warranty Liability at year end is $ 10,800 ($ 18,000 - $ 7,200), which equals the expected cost of honouring the 90 remaining warranty contracts.

Question 4

Self-employed individuals pay both the employee's and the employer's share of

Accepted Answer

A)   CPP.
B)   EI.
C)   Income taxes.
D)   Union dues.

Question 5

Match the items below by entering the appropriate code letter in the space provided.
-A form showing employment income, CPP contributions, ____
EI premiums, and income tax deducted for the year, in addition
to other voluntary deductions

Accepted Answer

A)  Current liability
B)  Notes Payable
C)  Statement of Remuneration Paid (Form T4) 
D)  Sales taxes
E)  Contingent liabilityF) Federal and provincial income taxes, CPP, and EIG) Canada Pension Plan (CPP) H) Employment InsuranceI) Post-retirement benefitsJ) Pension plan

Question 6

The paid absence that is most commonly accrued is

Accepted Answer

A)   voting leave.
B)   vacation time.
C)   maternity leave.
D)   disability leave.

Question 7

Which of the following is not considered an estimated liability?

Accepted Answer

A)   accrued wages
B)   gift card promotions
C)   warranties
D)   customer loyalty programs

Question 8

It is not necessary to prepare an adjusting entry to recognize the current maturity of long-term debt.

Accepted Answer

A) True 
 B)False

Question 9

Employers are required to withhold income taxes from employees each pay period. Identify the variable that is not used to determine the amount withheld.

Accepted Answer

A)   the employee's gross earnings
B)   the size of the company the employee is working for
C)   the number of credits claimed by the employee for himself, herself, spouse, and other dependents
D)   the length of the pay period

Question 10

Gloria Company's December 31, 2021, trial balance includes the following accounts:  Other information:
The mortgage payable is due in annual principal installments of $ 4,000 per year.
The note payable is due in full in 18 months' time.
Industry average working capital ratio is 2.5:1
Instructions 
a) Prepare the current liabilities section of Gloria's December 31, 2021, balance sheet.
b) Calculate and comment on Gloria's working capital and current ratio.

Accepted Answer

The answer of Gloria Company's December 31, 2021, trial balance...

Question 11

The employer's share of personal income tax is ___ the employee's share.

Accepted Answer

A)   higher than
B)   lower than
C)   equal to
D)   Employers are not required to share in this cost.

Question 12

The accounting for warranty costs is based on the concept of matching expenses with revenues, which requires that the estimated cost of honouring warranty contracts should be recognized as an expense

Accepted Answer

A)   when the product is brought in for repairs.
B)   in the period in which the product was sold.
C)   at the end of the warranty period.
D)   only if the repairs are expected to be made within one year.

Question 13

Paid absences and post-employment benefits

Accepted Answer

A)   are supplemental benefits for injured workers.
B)   are rights to receive compensation for future absences when certain conditions of employment are met.
C)   must be accrued for.
D)   are paid to retired or terminated employees.

Question 14

Barker Company has a December 31 year end. The company received its property tax bill for 2021 on March 1, 2021. According to the bill, taxes of $ 24,000 for the year ended December 31, 2021 are due by April 30, 2021. On April 30, 2021, Barker will record which of the following entries?

Accepted Answer

A)   Dr. Cash; Cr. Property Tax Payable
B)   Dr. Property Tax Payable; Dr. Prepaid Property Tax; Cr. Cash
C)   Dr. Property Tax Expense; Cr. Property Tax Payable
D)   Dr. Property Tax Expense; Cr. Cash

Question 15

At its December 31 year end, Jamison Company recorded $ 200 interest payable on a $ 10,000, three-month, 5% note payable. The company's financial statements will present notes payable of $ 10,200.

Accepted Answer

A) True 
 B)False

Question 16

Prime rate refers to the rate that banks charge their worst customers.

Accepted Answer

A) True 
 B)False

Question 17

An estimated liability is a liability that is known to exist but whose amount and timing are uncertain.

Accepted Answer

A) True 
 B)False

Question 18

Muffin Company issued a five-year, interest-bearing note payable for $ 50,000 on January 1, 2021. Each January the company is required to pay $ 10,000 on the note. How will this note be reported on the December 31, 2022, balance sheet?

Accepted Answer

A)   Long-term debt, $ 50,000
B)   Long-term debt, $ 40,000
C)   Long-term debt, $ 30,000; Long-term debt due within one year, $ 10,000
D)   Long-term debt of $ 40,000; Long-term debt due within one year, $ 10,000

Question 19

Kenny Company billed its customers a total of $ 2,655,500 including HST of $ 305,500 for the month of November.
Instructions
Prepare the general journal entry to record the revenue and related liabilities for the month.

Accepted Answer

The answer of Kenny Company billed its customers a total...

Question 20

Loyalty programs are designed to

Accepted Answer

A)   decrease sales.
B)   increase inventory levels.
C)   increase sales.
D)   decrease cost of goods sold.

Exam 2: Current Liabilities and Payroll

A future commitment is not considered a liability unless a present obligation also exists.

For small employers with perfect payroll deduction records, withholdings must be reported and remitted to the government

Duane Herman sells Instructions a) Prepare the journal entry to record the repairs made under warranty. b) Prepare the journal entry to record the estimated warranty expense for the year. Determine the balance in the Warranty Liability account at the end of the year.

Self-employed individuals pay both the employee's and the employer's share of

Match the items below by entering the appropriate code letter in the space provided. -A form showing employment income, CPP contributions, ____ EI premiums, and income tax deducted for the year, in addition to other voluntary deductions

The paid absence that is most commonly accrued is

Which of the following is not considered an estimated liability?

It is not necessary to prepare an adjusting entry to recognize the current maturity of long-term debt.

Employers are required to withhold income taxes from employees each pay period. Identify the variable that is not used to determine the amount withheld.

The employer's share of personal income tax is ___ the employee's share.

The accounting for warranty costs is based on the concept of matching expenses with revenues, which requires that the estimated cost of honouring warranty contracts should be recognized as an expense

Paid absences and post-employment benefits

Barker Company has a December 31 year end. The company received its property tax bill for 2021 on March 1, 2021. According to the bill, taxes of $ 24,000 for the year ended December 31, 2021 are due by April 30, 2021. On April 30, 2021, Barker will record which of the following entries?

At its December 31 year end, Jamison Company recorded $ 200 interest payable on a $ 10,000, three-month, 5% note payable. The company's financial statements will present notes payable of $ 10,200.

Prime rate refers to the rate that banks charge their worst customers.

An estimated liability is a liability that is known to exist but whose amount and timing are uncertain.

Muffin Company issued a five-year, interest-bearing note payable for $ 50,000 on January 1, 2021. Each January the company is required to pay $ 10,000 on the note. How will this note be reported on the December 31, 2022, balance sheet?

Kenny Company billed its customers a total of $ 2,655,500 including HST of $ 305,500 for the month of November. Instructions Prepare the general journal entry to record the revenue and related liabilities for the month.

Loyalty programs are designed to