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Exam 11: Current Liabilities and Payroll

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Question 31

Multiple Choice

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Proper payroll accounting methods are important for a business for all the reasons below except

A) good employee morale requires timely and accurate payroll payments.
B) payroll is subject to various federal and state regulations.
C) to help a business with cash flow problems by delayed payments of payroll taxes to federal and state agencies.
D) payroll and related payroll taxes have a significant effect on the net income of most businesses.

E) All of the above
F) C) and D)

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Question 32

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The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the

A) payroll register
B) payroll check
C) employee's earnings record
D) employer's earnings record

E) A) and C)
F) None of the above

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Question 33

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Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay?

Another name for the quick ratio is

The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.

Which of the following taxes would be deducted in determining an employee's net pay?

The following information is for employee Ella Dodd for the week ended March 15. Total hours worked: 48 Rate: $15 per hour, with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $100,000. Medicare tax: 1.5% on all earnings. State unemployment: 3.4% on maximum earnings of $7,000; on employer Federal unemployment: 0.8% on maximum earnings of $7,000; on employer

For paying their payroll, most employers use payroll checks drawn on a special bank account.

Which of the following would most likely be classified as a current liability?

Employers are required to compute and report payroll taxes on a calendar-year basis, even if a different fiscal year is used for financial reporting and income tax purposes.

Ecco Company sold $150,000 of kitchen appliances during September under a 6 month warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15 a customer required a $200 part replacement, plus $85 labor under the warranty. Provide the journal entry for (a.) the estimated expense on September 30 and (b.) the October 15 warranty work.

Obligations that depend on past events and that are based on future possible events are contingent liabilities.

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 7.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0.8%) unemployment taxes. The journal entry to record accrued salaries would include:

On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank. The discount rate was 6%, and the note was paid on November 30. (Assume a 360-day year is used for interest calculations.)

Which of the following are included in the employer's payroll taxes?

A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

Form W-2 is called the Wage and Tax Statement.

The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:

Most employers are required to withhold federal unemployment taxes from employee earnings.

Vacation pay payable is reported on the balance sheet as a(n)