Question 1

Promissory notes are nonnegotiable meaning that they cannot be transferred from party to party.

Accepted Answer

A) True 
 B)False

Question 2

Debt guarantees:

Accepted Answer

A)  Are never disclosed in the financial statements.
B)  Are considered to be a contingent liability.
C)  Are a bad business practice.
D)  Are recorded as a liability even though it is highly unlikely that the original debtor will default.
E)  All of the choices are correct.F) A) and B)
G) B) and E)

Question 3

A company has 90 employees and a weekly payroll of $117,000.The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%.The total withholding for federal income tax is $16,500 for the current week.Calculate the amount of FICA taxes owed (assuming no employee's salary is over the FICA limit)and prepare the journal entry to accrue this week's salaries expense and withholdings.

Accepted Answer

The answer of A company has 90 employees and a...

Question 4

An estimated liability:

Accepted Answer

A)  Is an unknown liability of a certain amount.
B)  Is a known obligation of an uncertain amount that can be reasonably estimated.
C)  Is a liability that may occur if a future event occurs.
D)  Can be the result of a lawsuit.
E)  Is not recorded until the amount is known for certain.F) C) and D)
G) B) and C)

Question 5

Employers must keep certain payroll records,including individual earnings reports for each employee.

Accepted Answer

A) True 
 B)False

Question 6

A company sold $12,000 worth of trampolines with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

Accepted Answer

A)  Consider the warranty expense a remote liability since the rate is only 2%.
B)  Recognize warranty expense at the time the warranty work is performed.
C)  Recognize warranty expense and liability in the year of the sale.
D)  Consider the warranty expense a contingent liability.
E)  Recognize warranty liability when the company purchases the trampolines.F) A) and B)
G) A) and E)

Question 7

The amount of federal income tax withheld depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

Accepted Answer

A) True 
 B)False

Question 8

A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

Accepted Answer

A)  Form 941.
B)  Tax table.
C)  Wage bracket withholding table.
D)  W-2.
E)  W-4.F) A) and D)
G) None of the above

Question 9

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) .F) A) and D)
G) A) and C)

Question 10

Debt guarantees are not usually disclosed as a contingent liability.

Accepted Answer

A) True 
 B)False

Question 11

All expected future payments are liabilities.

Accepted Answer

A) True 
 B)False

Question 12

Known liabilities are obligations set by agreements,contracts,or laws,and are measurable and definitely determinable.

Accepted Answer

A) True 
 B)False

Question 13

____________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.

Accepted Answer

Federal de...

Question 14

Estimated liabilities commonly arise from:

Accepted Answer

A)  Warranties.
B)  Vacation benefits.
C)  Income taxes.
D)  Employee benefits.
E)  All of the choices are correct.F) A) and E)
G) C) and D)

Question 15

An employer's federal unemployment taxes (FUTA) are reported:

Accepted Answer

A)  Annually.
B)  Semiannually.
C)  Quarterly.
D)  Monthly.
E)  Weekly.F) B) and C)
G) C) and E)

Question 16

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

Accepted Answer

A) True 
 B)False

Question 17

A company sells computers at a selling price of $1,800 each.Each computer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all computers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 computers,and 400 computers were serviced under the warranty at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

Accepted Answer

A)  $26,000
B)  $45,000
C)  $55,000
D)  $60,000
E)  $90,000F) D) and E)
G) A) and B)

Question 18

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Accepted Answer

A)  Current assets.
B)  Current liabilities.
C)  Long-term liabilities.
D)  Operating cycle liabilities.
E)  Bills.F) A) and D)
G) B) and C)

Question 19

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals:

Accepted Answer

A)  0.25.
B)  0.30.
C)  0.83.
D)  3.33.
E)  4.0.F) B) and C)
G) A) and E)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals:

Correct Answer
verified

The amount of federal income tax withheld depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

Correct Answer
verified

A company sold $12,000 worth of trampolines with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

Correct Answer
verified

An employer's federal unemployment taxes (FUTA) are reported:

Correct Answer
verified

Debt guarantees:

Correct Answer
verified

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

Correct Answer
verified

Estimated liabilities commonly arise from:

Correct Answer
verified

A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Known liabilities are obligations set by agreements,contracts,or laws,and are measurable and definitely determinable.

Correct Answer
verified

An estimated liability:

Correct Answer
verified

Correct Answer
verified

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Correct Answer
verified

Employers must keep certain payroll records,including individual earnings reports for each employee.

Correct Answer
verified

Debt guarantees are not usually disclosed as a contingent liability.

Correct Answer
verified

All expected future payments are liabilities.

Correct Answer
verified

Promissory notes are nonnegotiable meaning that they cannot be transferred from party to party.

Correct Answer
verified

The times interest earned computation is:

Correct Answer
verified

____________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.

Correct Answer
verified
Federal de...
View Answer

Exam 11: Current Liabilities and Payroll Accounting

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals:

Correct AnswerverifiedShow Answer

The amount of federal income tax withheld depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

Correct AnswerverifiedShow Answer

A company sold $12,000 worth of trampolines with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

Correct AnswerverifiedShow Answer

An employer's federal unemployment taxes (FUTA) are reported:

Correct AnswerverifiedShow Answer

Debt guarantees:

Correct AnswerverifiedShow Answer

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

Correct AnswerverifiedShow Answer

Estimated liabilities commonly arise from:

Correct AnswerverifiedShow Answer

A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Known liabilities are obligations set by agreements,contracts,or laws,and are measurable and definitely determinable.

Correct AnswerverifiedShow Answer

An estimated liability:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Correct AnswerverifiedShow Answer

Employers must keep certain payroll records,including individual earnings reports for each employee.

Correct AnswerverifiedShow Answer

Debt guarantees are not usually disclosed as a contingent liability.

Correct AnswerverifiedShow Answer

All expected future payments are liabilities.

Correct AnswerverifiedShow Answer

Promissory notes are nonnegotiable meaning that they cannot be transferred from party to party.

Correct AnswerverifiedShow Answer

The times interest earned computation is:

Correct AnswerverifiedShow Answer

____________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.

Correct AnswerverifiedFederal de...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Federal de...
View Answer