Question 1

FUTA taxes are:

Accepted Answer

A)  Social Security taxes.
B)  Employee income taxes.
C)  Medicare taxes.
D)  Unemployment taxes.
E)  Employee deductions.F) A) and E)
G) B) and E)

Question 2

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 3

Triston Vale is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The 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. The amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer's payroll taxes expenses for this employee?

Accepted Answer

A)  $1,284.27
B)  $398.57
C)  $711.17
D)  $312.60
E)  $1,596.87F) C) and D)
G) B) and C)

Question 4

A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 Cash, credit Unearned Revenue.
B)  Debit Sales, credit Unearned Revenue.
C)  Debit Unearned Revenue, credit Sales.
D)  Debit Cash, credit Ticket sales payable.
E)  Debit Unearned Revenue, credit Cash.F) A) and C)
G) None of the above

Question 7

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Accepted Answer

A)  Debit Cash $7,650; credit Interest Revenue $150; credit Notes Receivable $7,500.
B)  Debit Notes Payable $7,500; credit Cash $7,500.
C)  Debit Notes Payable $7,500; credit Interest Expense $150; credit Cash $7,350.
D)  Debit Notes Payable $7,500; debit Interest Expense $150; credit Cash $7,650.
E)  Debit Notes Payable $7,650; credit Cash $7,650.F) A) and C)
G) None of the above

Question 8

Which of the following is not true regarding the unemployment insurance program?

Accepted Answer

A)  It provides unemployment benefits to qualified workers.
B)  It adjusts rates paid by employers based on their merit rating.
C)  It is administered by each state.
D)  It requires withholding from the employee wages.
E)  It is a joint federal and state program.F) A) and E)
G) A) and D)

Question 9

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) C) and E)
G) B) and E)

Question 10

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to record the estimated warranty provision at the end of the month is:

Accepted Answer

A)  Debit Estimated Warranty Liability $14,000; credit Warranty Expense $14,000.
B)  Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
C)  Debit Warranty Expense $25,500; credit Estimated Warranty Liability $25,500.
D)  Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
E)  Debit Estimated Warranty Liability $11,500; credit Warranty Expense $11,500.F) A) and E)
G) B) and C)

Question 11

Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year, and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. What is the total amount of taxes withheld from the Trey's earnings?

Accepted Answer

A)  $1,027.86
B)  $680.70
C)  $1,375.02
D)  $746.50
E)  $962.06F) A) and C)
G) C) and D)

Question 12

Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Accepted Answer

A)  Debit to Medical Insurance Payable $5,000.
B)  Debit to Employee Benefits Expense $11,000.
C)  Credit to Employee Benefits Expense $11,000.
D)  Debit to Employee Retirement Program Payable $6,000.
E)  Debit to Payroll Taxes Expense $11,000.F) B) and C)
G) A) and E)

Question 13

The wage bracket withholding table is used to:

Accepted Answer

A)  Compute Medicare withholding.
B)  Compute unemployment taxes.
C)  Prepare the W-4.
D)  Compute social security withholding.
E)  Compute federal income tax withholding.F) C) and D)
G) B) and C)

Question 14

The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000. The tax rate for Social Security is 6.2% of the first $118,500 earned each 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 FICA-Social Security withheld from this employee for the month of June?

Accepted Answer

A)  $290.00
B)  $268.25
C)  $1,147.00
D)  $7,347.00
E)  $1,240.00F) A) and B)
G) A) and C)

Question 15

When a company is obligated for sales taxes payable, it is reported as a(n) :

Accepted Answer

A)  Business expense.
B)  Estimated liability.
C)  Current liability.
D)  Long-term liability.
E)  Contingent liability.F) All of the above
G) B) and D)

Question 16

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

Question 17

Accrued vacation benefits are a form of estimated liability for an employer.

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) B) and D)
G) D) and E)

Question 19

A contingent liability is:

Accepted Answer

A)  An obligation not requiring future payment.
B)  Always of a specific amount.
C)  An obligation arising from a future event.
D)  An obligation arising from the purchase of goods or services on credit.
E)  A potential obligation that depends on a future event arising from a past transaction or event.F) A) and B)
G) C) and D)

Question 20

Which of the following do not apply to unearned revenues?

Accepted Answer

A)  Also called collections in advance.
B)  Amounts received in advance from customers for future delivery of products or services.
C)  Also called prepayments.
D)  Also called deferred revenues.
E)  Amounts to be received in the future from customers for delivery of products or services in the current period.F) B) and E)
G) None of the above

Exam 11: Current Liabilities and Payroll Accounting

In the accounting records of a defendant, lawsuits:

Correct Answer
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Accrued vacation benefits are a form of estimated liability for an employer.

Correct Answer
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A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

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

Correct Answer
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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
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Correct Answer
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On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Correct Answer
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When a company is obligated for sales taxes payable, it is reported as a(n) :

Correct Answer
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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
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An estimated liability:

Correct Answer
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A contingent liability is:

Correct Answer
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Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Correct Answer
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Which of the following do not apply to unearned revenues?

Correct Answer
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The wage bracket withholding table is used to:

Correct Answer
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Correct Answer
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FUTA taxes are:

Correct Answer
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Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Correct Answer
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Which of the following is not true regarding the unemployment insurance program?

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

In the accounting records of a defendant, lawsuits:

Correct AnswerverifiedShow Answer

Accrued vacation benefits are a form of estimated liability for an employer.

Correct AnswerverifiedShow Answer

A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Correct AnswerverifiedShow Answer

When a company is obligated for sales taxes payable, it is reported as a(n) :

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

An estimated liability:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A contingent liability is:

Correct AnswerverifiedShow Answer

Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Correct AnswerverifiedShow Answer

Which of the following do not apply to unearned revenues?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The wage bracket withholding table is used to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

FUTA taxes are:

Correct AnswerverifiedShow Answer

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Correct AnswerverifiedShow Answer

Which of the following is not true regarding the unemployment insurance program?

Correct AnswerverifiedShow Answer

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