Question 1

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

Accepted Answer

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

Question 2

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Accepted Answer

A)  Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000.
B)  Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120.
C)  Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240.
D)  Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240.
E)  Debit Cash $9,240; credit Notes Payable $9,240.F) All of the above
G) None of the above

Question 3

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

Accepted Answer

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

Question 4

A payroll register does not include:

Accepted Answer

A)  Hours worked.
B)  Deductions.
C)  Pay period dates.
D)  Prior year's earnings
E)  Gross pay and net pay.F) C) and E)
G) B) and E)

Question 5

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

Question 6

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Accepted Answer

A)  $0
B)  $300
C)  $225
D)  $75
E)  $900F) C) and E)
G) C) and D)

Question 7

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 8

Explain the responsibilities of and the accounting by employers for deductions from employee payroll.

Accepted Answer

Employers are responsible for collecting...

Question 9

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

Accepted Answer

A)  Federal Reserve Bank.
B)  Federal depository bank.
C)  National bank.
D)  FDIC insured bank.
E)  Credit union.F) None of the above
G) C) and D)

Question 10

Debt guarantees are:

Accepted Answer

A)  A bad business practice.
B)  Considered to be current liabilities.
C)  Recorded as liabilities even though it is highly unlikely that the original debtor will default.
D)  Considered to be contingent liabilities.
E)  Never disclosed in the financial statements.F) A) and E)
G) B) and D)

Question 11

On November 1, Casey's Snowboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable.
a. What amount of interest expense on this note should Casey's Snowboards report on year-end December 31?
b. Prepare Casey's journal entry to record the issuance of the note payable.
c. Prepare Casey's adjusting journal entry at the end of the year
d. Prepare Casey's journal entry to record the payment of the note on February 1 of the following year.

Accepted Answer

The answer of On November 1, Casey's Snowboards signed a...

Question 12

Match between columns
                        Premises: Sales taxes payable
Vacation benefits
Payroll taxes payable
Unearned revenues
Accrued wages payable
Lawsuit against the company
Income taxes payable
Accounts payable
Warranty on products sold this year
Debt guarantees

Accepted Answer

The Answer of Contingent liability and Estimated liability and Known is...

Question 13

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 on the note? (Use 360 days a year.)

Accepted Answer

A)  Debit Interest Payable, $240; credit Interest Expense, $240.
B)  Debit Interest Expense, $720; credit Interest Payable, $720.
C)  Debit Interest Expense, $120; credit Interest Payable, $120.
D)  Debit interest payable, $120; credit interest expense, $120.
E)  No adjusting entry is required.F) B) and C)
G) A) and C)

Question 14

Contingent liabilities must be recorded if:

Accepted Answer

A)  The future event is reasonably possible but not estimable.
B)  The amount owed cannot be reasonably estimated.
C)  The future event is probable but not estimable.
D)  The future event is remote.
E)  The future event is probable and the amount owed can be reasonably estimated.F) All of the above
G) B) and C)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

If a company uses a special payroll bank account:

Accepted Answer

A)  There is no need to issue W-2's.
B)  The company does not need to issue paychecks.
C)  The company draws one check for the entire payroll on the regular bank account and deposits it in the payroll bank account.
D)  The company must use a federal depository bank for the payroll bank account.
E)  There is no need for a payroll register.F) A) and D)
G) B) and D)

Question 17

All of the following are employer payroll taxes except:

Accepted Answer

A)  Federal income tax equal to that withheld from employees.
B)  Medicare tax equal to that withheld from employees.
C)  State unemployment tax.
D)  Social Security tax equal to that withheld from employees.
E)  Federal unemployment tax.F) B) and E)
G) C) and E)

Question 18

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Accepted Answer

A) True 
 B)False

Question 19

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

Accepted Answer

A)  Interest.
B)  Principal.
C)  Accounts Payable.
D)  Cash.
E)  Face Value.F) B) and D)
G) A) and C)

Question 20

An employee earned $4,600 in February working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The employee has $644 in federal income taxes withheld and has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a retirement plan each month. The employer pays the $200 remainder of the health insurance premium and an equal amount of contribution to the retirement fund. What is the amount of net pay for the employee for the month of February?

Accepted Answer

A)  $3,446.00
B)  $3,496.00
C)  $3,604.10
D)  $3,094.10
E)  $2,634.10F) All of the above
G) B) and E)

Exam 11: Current Liabilities and Payroll Accounting

Classify each of the following items as either:

Correct Answer
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Correct Answer
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A payroll register does not include:

Correct Answer
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Debt guarantees are:

Correct Answer
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All of the following are employer payroll taxes except:

Correct Answer
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On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Correct Answer
verified

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

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

Contingent liabilities must be recorded if:

Correct Answer
verified

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

Correct Answer
verified

If a company uses a special payroll bank account:

Correct Answer
verified

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

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 on the note? (Use 360 days a year.)

Correct Answer
verified

Explain the responsibilities of and the accounting by employers for deductions from employee payroll.

Correct Answer
verified
Employers are responsible for collecting...
View Answer

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

Correct Answer
verified

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

Classify each of the following items as either:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A payroll register does not include:

Correct AnswerverifiedShow Answer

Debt guarantees are:

Correct AnswerverifiedShow Answer

All of the following are employer payroll taxes except:

Correct AnswerverifiedShow Answer

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

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

Contingent liabilities must be recorded if:

Correct AnswerverifiedShow Answer

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

Correct AnswerverifiedShow Answer

If a company uses a special payroll bank account:

Correct AnswerverifiedShow Answer

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

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 on the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

Explain the responsibilities of and the accounting by employers for deductions from employee payroll.

Correct AnswerverifiedEmployers are responsible for collecting...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Employers are responsible for collecting...
View Answer

Correct Answer
verified

Correct Answer
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