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Exam 8: Current Liabilities

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Question 41

Multiple Choice

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Sales taxes collected by a company on behalf of the state and local government are recorded by:

A) A debit to an expense account.
B) A credit to a revenue account.
C) A debit to a revenue account.
D) A credit to a liability account.

E) All of the above
F) A) and B)

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Question 42

True/False

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Long-term obligations such as notes,mortgages,and bonds are reported as long-term liabilities when they become payable within the upcoming year.These liabilities usually are reclassified and reported as current liabilities when they become payable within the upcoming year.

A) True
B) False

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Question 43

Multiple Choice

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Which of the following is not an employer payroll cost?

When a company delivers a product or service for which a customer has previously paid,the company records the following:

Deferred Revenues is a(n) :

Bear Essentials borrowed $50,000 from Stacks Bank and signed a promissory note.What entry should Stacks Bank record?

Carpenter Inc.estimates warranty expense at 2% of sales.Sales during the year were $4 million and warranty expenditures were $44,000.What was the balance in the Warranty Liability account at the end of the year?

On November 1,2018,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2019.The Bagel Factory should report interest payable at December 31,2018,in the amount of:

On November 1,2018,New Morning Bakery signed a $200,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2019.New Morning Bakery should record which of the following adjusting entries at December 31,2018?

Union Apparel has sales including sales taxes for the month of $551,200.If the sales tax rate is 6%,how much does Union Apparel owe for sales tax?

The employer is required to match the amount of FICA taxes withheld for each employee,effectively doubling the amount paid into Social Security.

Deductions from employee salaries in determining the amount of payroll checks include withholdings for federal and state income taxes,FICA taxes,and the employee portion of insurance and retirement contributions.

Large,highly-rated firms sometimes sell commercial paper:

On December 1,2018,Old World Deli signed a $300,000,5%,six-month note payable with the amount borrowed plus accrued interest due six months later on June 1,2019.Old World Deli records the appropriate adjusting entry for the note on December 31,2018.What amount of cash will be needed to pay back the note payable plus any accrued interest on June 1,2019?

Action Travel has 10 employees each working 40 hours per week and earning $20 an hour.Federal income taxes are withheld at 15% and state income taxes at 6%.FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee.What is the actual direct deposit of payroll for the first week of January?

Interest is stated in terms of an annual percentage rate to be applied to the face value of the loan.

Amplify,Inc.was sued by Sound City for $50,000.Sound City feels very confident that it will win the case and will be awarded the full amount.Amplify,Inc.feels it is probable that it will lose the case and pay Sound City the full amount.Which of the following is correct?

We record interest expense in the period in which we pay it,rather than in the period we incur it.Interest expense is recorded in the period incurred,not in the period in which we pay it.

Which of the following would result in an increase in the current ratio,but not necessarily the acid-test ratio?

A company is said to be liquid if it has sufficient cash to pay currently maturing debts.