Question 1

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31, the company's year end, on the note?

Accepted Answer

A)  Debit interest expense, $0; credit interest payable, $0.
B)  Debit interest payable, $120; credit interest expense, $120.
C)  Debit interest expense, $120; credit interest payable, $120.
D)  Debit interest expense, $720; credit interest payable, $720.
E)  Debit interest payable, $240; credit interest expense, $240.F) A) and D)
G) A) and C)

Question 2

All of the following statements regarding FICA taxes are true except:

Accepted Answer

A)  FICA taxes are deducted from the employee.
B)  Employers must pay withheld FICA taxes to the IRS.
C)  The amount of FICA deducted from the employee is credited to a liability account.
D)  A self-employed person is exempt from FICA taxes.
E)  An employer must pay FICA taxes equal to the amount withheld from the employee.F) A) and E)
G) A) and D)

Question 3

A ___________________ is a potential obligation that depends on a future event arising from a past transaction or event.

Accepted Answer

contingent...

Question 4

A company's income before interest expense and income taxes in 2016 and 2017 is $225,000 and $250,000, 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

2016: 5.0
2017: 5.6
Risk analysis: The i...

Question 5

Classify each of the following items as either:
A.Current liability
B.Long-term liability
C.Not a liability

Accepted Answer

1. A; 2. A; 3. A; 4....

Question 6

Employers' responsibilities for payroll do not include:

Accepted Answer

A)  Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld.
B)  Filing Form 941, the Employer's Quarterly Federal Tax Return.
C)  Filing Form 940, the Annual Federal Unemployment Tax Return.
D)  Maintaining individual earnings records for each employee.
E)  Recording an expense for the employee Federal Income Tax withholding.F) None of the above
G) A) and B)

Question 7

All of the following statements regarding liabilities are true 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)  Liabilities can involve uncertainty in whom to pay.F) C) and D)
G) C) and E)

Question 8

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Accepted Answer

A)  Debit Estimated Bonus Payable $32,500; credit Cash $32,500.
B)  Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.
C)  No entry since the bonuses are not paid until January.
D)  Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500.
E)  Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500.F) C) and E)
G) A) and B)

Question 9

Accrued vacation benefits are a form of estimated liability for an employer.

Accepted Answer

A) True 
 B)False

Question 10

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

Accepted Answer

A)  Debit Warranty Expense $7,400; credit Sales $7,400.
B)  Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400.
C)  Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400.
D)  Debit Estimated Warranty Liability $7,400; credit Cash $7,400.
E)  No entry is recorded until the items are returned for warranty repairs.F) B) and C)
G) A) and E)

Question 11

The full disclosure principle requires inclusion of information about contingent liabilities that are reasonably possible in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 12

The correct 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) B) and C)
G) None of the above

Question 13

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Accepted Answer

A)  Federal depository bank account.
B)  Employee's Individual Earnings account.
C)  Employees' bank account.
D)  Payroll register account.
E)  Payroll bank account.F) A) and B)
G) C) and E)

Question 14

Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year, and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. His net pay for the month is:

Accepted Answer

A)  $3,510.14
B)  $3,857.30
C)  $4,190.84
D)  $4,538.00
E)  $3,162.98F) B) and E)
G) B) and D)

Question 15

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

Accepted Answer

Known current liabilities are obligation...

Question 16

Which of the following is not true regarding the unemployment insurance program?

Accepted Answer

A)  It requires withholding from the employee wages.
B)  It is administered by each state.
C)  It provides unemployment benefits to qualified workers.
D)  It adjusts rates paid by employers based on their merit rating.
E)  It is a joint federal and state program.F) None of the above
G) B) and C)

Question 17

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. What is the total amount of taxes withheld from the Portia's earnings?

Accepted Answer

A)  $3,097.17
B)  $2,443.21
C)  $1,957.06
D)  $1,722.00
E)  $1,495.36F) A) and D)
G) A) and E)

Question 18

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

Accepted Answer

A) True 
 B)False

Question 19

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

Accepted Answer

A)  8.73.
B)  5.40.
C)  7.73.
D)  2.33.
E)  0.11.F) A) and B)
G) A) and E)

Question 20

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the tax rate for FICA-Medicare is 1.45% of all earnings.

Accepted Answer

The answer of Calculate the total amount of FICA withholding...

Exam 9: Reporting and Analyzing Current Liabilities

Which of the following is not true regarding the unemployment insurance program?

Correct Answer
verified

Accrued vacation benefits are a form of estimated liability for an employer.

Correct Answer
verified

Employers' responsibilities for payroll do not include:

Correct Answer
verified

The full disclosure principle requires inclusion of information about contingent liabilities that are reasonably possible in the notes to the financial statements.

Correct Answer
verified

All of the following statements regarding liabilities are true except:

Correct Answer
verified

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the tax rate for FICA-Medicare is 1.45% of all earnings.

Correct Answer
verified

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

Correct Answer
verified

The correct times interest earned computation is:

Correct Answer
verified

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

Correct Answer
verified

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

Correct Answer
verified

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

Correct Answer
verified
Known current liabilities are obligation...
View Answer

A ___________________ is a potential obligation that depends on a future event arising from a past transaction or event.

Correct Answer
verified
contingent...
View Answer

A company's income before interest expense and income taxes in 2016 and 2017 is $225,000 and $250,000, 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.

Correct Answer
verified
2016: 5.0
2017: 5.6
Risk analysis: The i...
View Answer

Correct Answer
verified

Correct Answer
verified

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Correct Answer
verified

Classify each of the following items as either: A.Current liability B.Long-term liability C.Not a liability

Correct Answer
verified
1. A; 2. A; 3. A; 4....
View Answer

All of the following statements regarding FICA taxes are true except:

Correct Answer
verified

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31, the company's year end, on the note?

Correct Answer
verified

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Correct Answer
verified

Exam 9: Reporting and Analyzing Current Liabilities

Which of the following is not true regarding the unemployment insurance program?

Correct AnswerverifiedShow Answer

Accrued vacation benefits are a form of estimated liability for an employer.

Correct AnswerverifiedShow Answer

Employers' responsibilities for payroll do not include:

Correct AnswerverifiedShow Answer

The full disclosure principle requires inclusion of information about contingent liabilities that are reasonably possible in the notes to the financial statements.

Correct AnswerverifiedShow Answer

All of the following statements regarding liabilities are true except:

Correct AnswerverifiedShow Answer

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the tax rate for FICA-Medicare is 1.45% of all earnings.

Correct AnswerverifiedShow Answer

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

Correct AnswerverifiedShow Answer

The correct times interest earned computation is:

Correct AnswerverifiedShow Answer

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

Correct AnswerverifiedShow Answer

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedKnown current liabilities are obligation...View AnswerShow Answer

A ___________________ is a potential obligation that depends on a future event arising from a past transaction or event.

Correct Answerverifiedcontingent...View AnswerShow Answer

A company's income before interest expense and income taxes in 2016 and 2017 is $225,000 and $250,000, 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.

Correct Answerverified2016: 5.02017: 5.6Risk analysis: The i...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n) :

Correct AnswerverifiedShow Answer

Classify each of the following items as either: A.Current liability B.Long-term liability C.Not a liability

Correct Answerverified1. A; 2. A; 3. A; 4....View AnswerShow Answer

All of the following statements regarding FICA taxes are true except:

Correct AnswerverifiedShow Answer

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31, the company's year end, on the note?

Correct AnswerverifiedShow Answer

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Correct AnswerverifiedShow 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
Known current liabilities are obligation...
View Answer

Correct Answer
verified
contingent...
View Answer

Correct Answer
verified
2016: 5.0
2017: 5.6
Risk analysis: The i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1. A; 2. A; 3. A; 4....
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified