Question 1

Payroll is an example of a contingent liability for the employer.

Accepted Answer

A) True 
 B)False

Question 2

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

Accepted Answer

A) True 
 B)False

Question 3

An estimated liability:

Accepted Answer

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

Question 4

Contingent liabilities are recorded or disclosed unless they are:

Accepted Answer

A)   Possible and estimable.
B)   Probable and not estimable.
C)   Probable and estimable.
D)   Remote.
E)   Reasonably possible.F) A) and B)
G) A) and C)

Question 5

Obligations due within one year or the company's operating cycle, whichever is longer, are
________.

Accepted Answer

The answer of Obligations due within one year or the...

Question 6

Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

Accepted Answer

A)   Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
B)   Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
C)   Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
D)   Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.
E)   Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.F) D) and E)
G) C) and E)

Question 7

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Accepted Answer

A)   Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B)   Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
C)   Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
D)   Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E)   Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.F) A) and E)
G) C) and E)

Question 8

An employee earned $62,500 during the year working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of total unemployment taxes the employee must pay?

Accepted Answer

A)   $434.00
B)   $56.00
C)   $378.00
D)   $0.00
E)   $101.50F) A) and D)
G) C) and D)

Question 9

To compute the amount of tax withheld from an employee's pay, employers can use a ________ table.

Accepted Answer

wage brack...

Question 10

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Accepted Answer

A)   $3,312.45.
B)   $5,638.05.
C)   $8,950.50.
D)   $2,684.60.
E)   $0, since the FICA tax is only deducted from an employee's pay.F) C) and D)
G) A) and D)

Question 11

All of the following statements related to current liabilities for U.S. GAAP and IFRS are true except:

Accepted Answer

A)   The definitions and characteristics of current liabilities are broadly similar for both U.S. GAAP and IFRS.
B)   Because tax regulatory systems of countries are different, the approach to recording taxes is totally different.
C)   The term provision is typically used under IFRS to refer to what is titled liability under U.S. GAAP.
D)   When there is little uncertainty surrounding current liabilities, both require companies to record them in a similar manner.
E)   When there is a known current obligation that involves an uncertain amount, but one that can be reasonable estimated, both require similar treatment.F) C) and E)
G) A) and D)

Question 12

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 13

Early Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $800,000. Prepare the general journal entry to record the estimated employee bonus plan expense.

Accepted Answer

None...

Question 14

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

Accepted Answer

Employers are responsible for collecting...

Question 15

During August, Boxer Company sells $356,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,800 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. 
-The entry to record the estimated warranty expense for the month is:

Accepted Answer

A)   Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400.
B)   Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000.
C)   Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
D)   Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800.
E)   Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.F) B) and E)
G) B) and D)

Question 16

Uncertainties from the development of new competing products are not contingent liabilities.

Accepted Answer

A) True 
 B)False

Question 17

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Accepted Answer

A) True 
 B)False

Question 18

In the accounting records of a defendant, lawsuits:

Accepted Answer

A)   Are estimated liabilities.
B)   Should always be disclosed.
C)   Should always be recorded.
D)   Should be recorded if payment for damages is probable and the amount can be reasonably estimated.
E)   Should never be recorded.F) A) and B)
G) A) and E)

Question 19

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

Accepted Answer

A)   W-4.
B)   Form 941.
C)   Wage bracket withholding table.
D)   W-2.
E)   Tax table.F) A) and B)
G) A) and C)

Question 20

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Accepted Answer

A)   Debit Unearned Revenue $11,250, credit Sales $11,250.
B)   Debit Prepaid Subscriptions $33,750; credit Unearned Revenue $33,750.
C)   Debit Unearned Revenue $45,000; credit Cash $45,000.
D)   Debit Prepaid Subscriptions $11,250, credit Sales $11,250.
E)   Debit Cash $11,250, credit Sales $11,250.F) A) and B)
G) B) and D)

Exam 11: Current Liabilities and Payroll Accounting

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

Correct Answer
verified

Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

Correct Answer
verified

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Correct Answer
verified

Early Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $800,000. Prepare the general journal entry to record the estimated employee bonus plan expense.

Correct Answer
verified
None...
View Answer

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

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

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Correct Answer
verified

Uncertainties from the development of new competing products are not contingent liabilities.

Correct Answer
verified

Obligations due within one year or the company's operating cycle, whichever is longer, are ________.

Correct Answer
verified

An estimated liability:

Correct Answer
verified

Payroll is an example of a contingent liability for the employer.

Correct Answer
verified

Correct Answer
verified

To compute the amount of tax withheld from an employee's pay, employers can use a ________ table.

Correct Answer
verified
wage brack...
View Answer

A note payable can be used to extend the payment due on an account payable.

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

Contingent liabilities are recorded or disclosed unless they are:

Correct Answer
verified

All of the following statements related to current liabilities for U.S. GAAP and IFRS are true except:

Correct Answer
verified

In the accounting records of a defendant, lawsuits:

Correct Answer
verified

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Correct Answer
verified

Correct Answer
verified

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

Correct AnswerverifiedShow Answer

Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

Correct AnswerverifiedShow Answer

An employee earned $43,300 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Correct AnswerverifiedShow Answer

Early Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $800,000. Prepare the general journal entry to record the estimated employee bonus plan expense.

Correct AnswerverifiedNone...View AnswerShow Answer

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

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

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Correct AnswerverifiedShow Answer

Uncertainties from the development of new competing products are not contingent liabilities.

Correct AnswerverifiedShow Answer

Obligations due within one year or the company's operating cycle, whichever is longer, are ________.

Correct AnswerverifiedShow Answer

An estimated liability:

Correct AnswerverifiedShow Answer

Payroll is an example of a contingent liability for the employer.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To compute the amount of tax withheld from an employee's pay, employers can use a ________ table.

Correct Answerverifiedwage brack...View AnswerShow Answer

A note payable can be used to extend the payment due on an account payable.

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

Contingent liabilities are recorded or disclosed unless they are:

Correct AnswerverifiedShow Answer

All of the following statements related to current liabilities for U.S. GAAP and IFRS are true except:

Correct AnswerverifiedShow Answer

In the accounting records of a defendant, lawsuits:

Correct AnswerverifiedShow Answer

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers. When the company mails the first quarterly journal to customers, it should record:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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None...
View Answer

Correct Answer
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Employers are responsible for collecting...
View 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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wage brack...
View Answer

Correct Answer
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Correct Answer
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