The Employer Should Record Payroll Deductions As:

Question: Obligations to be paid within one year or the company's operating cycle, whichever is longer, are:

Answer: current liabilities.

Question: Which of the following do not apply to unearned revenues?

Answer: Amounts to be received in the future from customers for delivery of products or services in the current period

Question: A short-term note payable:

Answer: is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.

Question: The employer should record deductions from employee pay as:

Answer: current liabilities.

Question: The amount of federal income taxes withheld from an employee's paycheck is determined by:

Answer: current earnings for the pay period and number of withholding allowances the employee claims.

Question: Debt guarantees are:

Answer: considered to be contingent liabilities.

Question: Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Answer: long-term liabilities.

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

Answer: current liability.

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

Answer: FALSE

Question: A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

Answer: recognize warranty expense and liability in the year of the sale.

Question: The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

Answer: interest.

Question: All of the following are employer payroll taxes except:

Answer: federal income tax equal to that withheld from employees.

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

Answer: It requires withholding from the employee wages.

Question: All of the following statements related to recording warranty expense are true except:

Answer: warranty expense should be recorded in the period when the warranty service is performed.

Question: A contingent liability is:

Answer: a potential obligation that depends on a future event arising from a past transaction or event.

Question: Short-term notes payable:

Answer: can be issued in return for money borrowed from a bank.

Question: Gross pay is:

Answer: total compensation earned by an employee before any deductions.

Question: The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

Answer: merit rating.

Question: Employee vacation benefits:

Answer: are estimated liabilities.

Question: Uncertainties such as natural disasters are:

Answer: not contingent liabilities because they are future events not arising from past transactions or events.

Question: A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Answer: FALSE

Question: All of the following statements regarding uncertainty in liabilities are true except:

Answer: a company only records liabilities when it knows whom to pay, when to pay, and how much to pay.

Question: All of the following are true of known liabilities except:

Answer: are potential obligations that depend on some future event occurring.

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

Answer: TRUE

Question: FICA taxes include:

Answer: social Security and Medicare taxes.

Question: In the accounting records of a defendant, lawsuits:

Answer: should be recorded if payment for damages is probable and the amount can be reasonably estimated.

Question: All of the following statements regarding long-term liabilities are true except:

Answer: liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities.

Question: Estimated liabilities commonly arise from all of the following except:

Answer: unearned revenues.

Question: Contingent liabilities are recorded or disclosed unless they are:

Answer: remote

Question: FUTA taxes are:

Answer: unemployment taxes.

Question: Contingent liabilities must be recorded if:

Answer: the future event is probable and the amount owed can be reasonably estimated.

Question: Amounts received in advance from customers for future products or services:

Answer: are liabilities.

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

Answer: TRUE