Question 1

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accepted Answer

A)  The amount of the employee's current earnings for the pay period and number of withholding allowances the employee claims. 
B)  The employer's merit rating. 
C)  The amount of social security taxes. 
D)  Multiplying the gross pay by 6.2%. 
E)  All of these.

Question 2

The difference between the amount borrowed and the amount repaid is referred to as _____________.

Accepted Answer

The answer of The difference between the amount borrowed and...

Question 3

Match each of the following terms a through j with the appropriate definitions1 through

Accepted Answer

The answer of Match each of the following terms a...

Question 4

Matt and Bryan Walls of SnorgTees stress the importance of managing liabilities. What are some of the liabilities that the brothers discovered they would have to manage to be successful?

Accepted Answer

The answer of Matt and Bryan Walls of SnorgTees stress...

Question 5

A company's income before interest expense and income taxes in 2010 and 2011 is $225,000 and $200,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Accepted Answer

The answer of A company's income before interest expense and...

Question 6

Helix Co. entered into the following transactions involving short-term notes payable.
On May 14, Helix purchased $40,000 merchandise from Advent Co., terms are 2/15, n/30. Helix uses the perpetual inventory system.
On May 29, Helix replaced the May 14 account payable with a 60-day, $30,000 note bearing 8% annual along with paying $10,000 in cash. ________ Paid the amount due on the note at maturity.
1. Determine the maturity date for the note.
2. Prepare journal entries for all the preceding transactions and events.

Accepted Answer

The answer of Helix Co. entered into the following transactions...

Question 7

On March 17, Grady Company agrees to accept a 60-day, 10%, $4,500 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Alert Company?

Accepted Answer

A)  Debit Notes Payable $4,500; credit Accounts Payable $4,500. 
B)  Debit Accounts Payable $4,500; credit Notes Payable $4,500. 
C)  Debit Accounts Receivable $4,500; credit Notes Payable $4,500. 
D)  Debit Cash $4,500; credit Notes Payable $4,500. 
E)  Debit Sales $4,500; credit Notes Payable $4,500.

Question 8

Uncertainties from the development of new competing products are contingent liabilities.

Accepted Answer

A) True 
 B)False

Question 9

Recording employee payroll deductions may involve:

Accepted Answer

A)  Liabilities to individual employees. 
B)  Liabilities to federal and state governments. 
C)  Liabilities to insurance companies. 
D)  Liabilities to labor unions. 
E)  All of these.

Question 10

A corporation has a $42,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $50,000. The company should record an entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

Accepted Answer

A) True 
 B)False

Question 11

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

Accepted Answer

A) True 
 B)False

Question 12

A _______________________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.

Accepted Answer

The answer of A _______________________ is a written promise to...

Question 13

What are known current liabilities? Cite at least two examples of known current liabilities.

Accepted Answer

The answer of What are known current liabilities? Cite at...

Question 14

A company had fixed interest expense of $6,000, its income before interest expense and any income taxes is $18,000, and its net income is $8,400. The company's times interest earned ratio equals:

Accepted Answer

A)  0.33. 
B)  0.71. 
C)  1.40. 
D)  3.00. 
E)  12,000.

Question 15

Times interest earned is computed by dividing _______________ by interest expense.

Accepted Answer

The answer of Times interest earned is computed by dividing...

Question 16

Starling Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300). The sales tax law requires Starling to collect 8.25% sales tax on every dollar of merchandise sold. Record the entry for the sale and its applicable sales tax.

Accepted Answer

The answer of Starling Company sells merchandise for $24,000 cash...

Question 17

The payroll records of a company provided the following data for the weekly pay period ended December 7:
The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45% on all of this week's wages paid to each employee. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Prepare the journal entries to (a) accrue the payroll and (b) record payroll taxes expense.

Accepted Answer

The answer of The payroll records of a company provided...

Question 18

Unearned revenues are liabilities.

Accepted Answer

A) True 
 B)False

Question 19

A single liability can be divided between current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 20

Unearned revenues are amounts received _______________ for future products or services.

Accepted Answer

The answer of Unearned revenues are amounts received _______________ for...

Exam 11: Current Liabilities and Payroll Accounting

The amount of federal income taxes withheld from an employee's paycheck is determined by:

The difference between the amount borrowed and the amount repaid is referred to as _____________.

Match each of the following terms a through j with the appropriate definitions1 through

Matt and Bryan Walls of SnorgTees stress the importance of managing liabilities. What are some of the liabilities that the brothers discovered they would have to manage to be successful?

A company's income before interest expense and income taxes in 2010 and 2011 is $225,000 and $200,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

On March 17, Grady Company agrees to accept a 60-day, 10%, $4,500 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Alert Company?

Uncertainties from the development of new competing products are contingent liabilities.

Recording employee payroll deductions may involve:

A corporation has a $42,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $50,000. The company should record an entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

A _______________________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.

What are known current liabilities? Cite at least two examples of known current liabilities.

A company had fixed interest expense of $6,000, its income before interest expense and any income taxes is $18,000, and its net income is $8,400. The company's times interest earned ratio equals:

Times interest earned is computed by dividing _______________ by interest expense.

Starling Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300). The sales tax law requires Starling to collect 8.25% sales tax on every dollar of merchandise sold. Record the entry for the sale and its applicable sales tax.

Unearned revenues are liabilities.

A single liability can be divided between current and noncurrent liabilities.

Unearned revenues are amounts received _______________ for future products or services.