Question 1

A company cannot have a liability if the amount of the obligation is unknown.

Accepted Answer

A) True 
 B)False

Question 2

A contingent liability is a potential obligation that is based on uncertainties surrounding future technologies and natural disasters.

Accepted Answer

A) True 
 B)False

Question 3

An estimated liability:

Accepted Answer

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

Question 4

Accounts payable are:

Accepted Answer

A)  Amounts owed to suppliers for products and/or services purchased on credit.
B)  Amounts received in advance from customers for future services.
C)  Estimated liabilities.
D)  Not usually due on specific dates.
E)  Always payable within 30 days.F) D) and E)
G) B) and C)

Question 5

If a company uses a special payroll bank account:

Accepted Answer

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

Question 6

On September 1,Knack Company signed a $50,000,90-day,5% note payable with Central Savings Bank.What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Accepted Answer

A)  Debit Interest Expense $625; credit Interest Payable $625.
B)  Debit Notes Payable $50,000; credit Interest Revenue $625; credit Cash $49,375.
C)  Debit Cash $50,625; credit Notes Receivable $50,625.
D)  Debit Notes Payable $50,625; credit Cash $50,625.
E)  Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625.F) A) and B)
G) A) and C)

Question 7

Identify each of the following payroll taxes as an (A)Employer Payroll Tax,(B)Employee Payroll Tax,or (C)Both.
1.FICA-Social Security taxes
2.FICA-Medicare taxes
3.FUTA (federal unemployment taxes)
4.SUTA (state unemployment taxes)
5.Employee federal income taxes
6.Employee state and local income taxes

Accepted Answer

1.C; 2.C; ...

Question 8

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 customer warranty repairs is:

Accepted Answer

A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B)  Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.
C)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
D)  Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.
E)  Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.F) None of the above
G) D) and E)

Question 9

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded by Watson Enterprises upon signing the note?

Accepted Answer

A)  Debit Accounts Receivable $24,000; credit Notes Receivable $24,000.
B)  Debit Accounts Payable $24,000; credit Notes Payable $24,000.
C)  Debit Accounts Payable $24,160; credit Notes Payable $24,160.
D)  Debit Notes Payable $24,000; debit Interest Expense $160; credit Accounts Payable $24,160.
E)  Debit Notes Payable $24,000; debit Interest Expense $160; credit Cash $24,160.F) A) and D)
G) B) and C)

Question 10

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

Question 11

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

Accepted Answer

A)  Debit Sales,credit Unearned Revenue.
B)  Debit Unearned Revenue,credit Sales.
C)  Debit Cash,credit Unearned Revenue.
D)  Debit Unearned Revenue,credit Cash.
E)  Debit Cash,credit Ticket sales payable.F) A) and E)
G) A) and B)

Question 12

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue accounts payable.What is the journal entry needed to record the transaction by Indigo Company?

Accepted Answer

A)  Debit Notes Payable $4,500; credit Accounts Payable $4,500.
B)  Debit Accounts Payable $4,500; credit Notes Payable $4,500.
C)  Debit Accounts Receivable $4,500; credit Notes Payable $4,500.
D)  Debit Cash $4,500; credit Notes Payable $4,500.
E)  Debit Sales $4,500; credit Notes Payable $4,500.F) A) and D)
G) A) and B)

Question 13

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

Question 14

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Accepted Answer

A)  W-4.
B)  Form 941.
C)  Form 1040.
D)  Form 1099.
E)  W-2.F) D) and E)
G) A) and D)

Question 15

The amount of federal income tax withheld from employee pay depends on the employee's income and the number of withholding allowances claimed by the employee.

Accepted Answer

A) True 
 B)False

Question 16

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Accepted Answer

A) True 
 B)False

Question 17

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

Accepted Answer

The answer of Richardson Fields receives $31,680 cash in advance...

Question 18

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Accepted Answer

A)  $336.00.
B)  $420.00.
C)  $534.60.
D)  $594.00.
E)  $0.00.F) A) and E)
G) All of the above

Question 19

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:

Accepted Answer

A)  0.29
B)  3.50
C)  2.50
D)  1.75
E)  0.50F) A) and B)
G) A) and C)

Question 20

Employers keep employee earnings reports which include a cumulative record of an employee's hours worked,gross earnings,deductions,and net pay.

Accepted Answer

A) True 
 B)False

Exam 9: Accounting for Current Liabilities

Correct Answer
verified

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

Correct Answer
verified

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct Answer
verified

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded by Watson Enterprises upon signing the note?

Correct Answer
verified

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue accounts payable.What is the journal entry needed to record the transaction by Indigo Company?

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

An estimated liability:

Correct Answer
verified

A company cannot have a liability if the amount of the obligation is unknown.

Correct Answer
verified

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Correct Answer
verified

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

Correct Answer
verified

Accounts payable are:

Correct Answer
verified

On September 1,Knack Company signed a $50,000,90-day,5% note payable with Central Savings Bank.What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Correct Answer
verified

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:

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

Employers keep employee earnings reports which include a cumulative record of an employee's hours worked,gross earnings,deductions,and net pay.

Correct Answer
verified

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Correct Answer
verified

Correct Answer
verified
1.C; 2.C; ...
View Answer

A contingent liability is a potential obligation that is based on uncertainties surrounding future technologies and natural disasters.

Correct Answer
verified

The amount of federal income tax withheld from employee pay depends on the employee's income and the number of withholding allowances claimed by the employee.

Correct Answer
verified

Exam 9: Accounting for Current Liabilities

Correct AnswerverifiedShow Answer

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

Correct AnswerverifiedShow Answer

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct AnswerverifiedShow Answer

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded by Watson Enterprises upon signing the note?

Correct AnswerverifiedShow Answer

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue accounts payable.What is the journal entry needed to record the transaction by Indigo Company?

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

An estimated liability:

Correct AnswerverifiedShow Answer

A company cannot have a liability if the amount of the obligation is unknown.

Correct AnswerverifiedShow Answer

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Correct AnswerverifiedShow Answer

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

Correct AnswerverifiedShow Answer

Accounts payable are:

Correct AnswerverifiedShow Answer

On September 1,Knack Company signed a $50,000,90-day,5% note payable with Central Savings Bank.What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:

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

Employers keep employee earnings reports which include a cumulative record of an employee's hours worked,gross earnings,deductions,and net pay.

Correct AnswerverifiedShow Answer

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Correct AnswerverifiedShow Answer

Correct Answerverified1.C; 2.C; ...View AnswerShow Answer

A contingent liability is a potential obligation that is based on uncertainties surrounding future technologies and natural disasters.

Correct AnswerverifiedShow Answer

The amount of federal income tax withheld from employee pay depends on the employee's income and the number of withholding allowances claimed by the employee.

Correct AnswerverifiedShow Answer

Correct Answer
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1.C; 2.C; ...
View Answer

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Correct Answer
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