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