Accounting Ch. 8
Face amount x annual interest rate x fraction of the year
Choose the correct formula for calculating interest
False
True or false: Your employer is allowed to keep the amounts withheld from your gross pay.
Employer portion of Medicare tax Federal and state unemployment taxes
Which of the following are employer payroll costs?
SUTA FUTA
Which of these payroll taxes are paid only by the employer?
Number of exemptions claimed Amounts earned by employees
Withholding taxes for federal and state income tax are based upon which items?
current liability
normally payable within one year
Deferred revenues Sales tax payable The current portion of long-term debt
Common current liabilities include:
Debit to Cash $100,000 Credit to Note Payable $100,000
On November 1, 2018, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2019. The journal entry on November 1, 2018 would include which of the following?
are amounts subtracted from employees' gross earnings to determine their net pay decrease the amount of cash an employee receives
Payroll withholdings ______.
long-term liability
normally payable more than one year from now
fringe
Additional benefits such as health insurance, retirement benefits, or life insurance that are paid by the employer are called______________benefits.
contributions to retirement and other savings accounts payment of insurance premiums on employees behalf reduced or no-cost company-provided services
Which of the following are examples of fringe benefits provided by employers to their employees?
Charitable contributions State unemployment tax (SUTA) Federal unemployment tax (FUTA)
Which of the following are not required payroll withholdings?
Employee contributions to retirement plans Health insurance paid by the employee Federal income taxes
Which of the following are payroll withholdings that are subtracted from gross pay to arrive at take-home pay?
federal income taxes
Which of the following must employers by law withhold from their employees' pay?
employee investments in retirement plans federal and state income tax
Which of the following payroll-related costs are incurred by employees?
Unemployment taxes Federal Insurance Contributions Act amounts
Which of the following payroll-related taxes must the employer pay by law?
Medicare Social Security
Which of these payroll taxes are paid by the employer and the employee? (Check all that apply.)
revenue
An end-of-period adjusting entry that debits Deferred Revenue most likely will credit a(n) ______ account.
a liability
Deferred revenue is classified as
account
A(n)_____________ payable is a short-term liability that occurs when a company purchases goods and does not immediately pay with cash.
Federal unemployment tax Medicare contributions Social Security contributions
By law, an employer is required to pay which of the following amounts as payroll taxes?
current
Deferred revenues and sales tax payable typically are reported as_____________liabilities.
$20,000 x 0.08 x 6/12 The stated interest rate of 8% is an annual rate and the applicable interest is for 6 months.
Jingle Company signs a 6-month, $20,000 note. Stated interest rate is 8% payable at the maturity date. Interest incurred on the note is calculated as
Creates interest expense on the income statement
Notes payable is classified as a liability that has which of the following effects?
credit notes payable for $5,000
Rhodes borrowed $5,000 by signing a 5-year note with an interest rate of 8%. On the date the note is signed, Rhodes should
annual, 12 month rate
Schmidt Company borrows $10,000 from its bank and signs a 6-month note. Interest, which is due quarterly, is specified in the note as 6%. The 6% interest rate is a(n)
current liabilities
Taxes collected for taxing authorities are recognized as
accounts payable
A company purchases inventory or supplies and promises to pay within 30 to 45 days. No formal agreement is signed. This transaction is recorded as a(n)
liability
A probable future sacrifice of economic benefits arising from present obligations of an entity to transfer assets or provide services as a result of past transactions or events is a(n) _________________.
A debit to Cash of $300 and a credit to Deferred Revenue of $300
ABC Airlines collects $300 for a round-trip ticket from Chicago to Los Angeles and back. How does ABC Airlines record the $300 collected in advance?
payroll withholdings
Amounts that are subtracted from an employee's gross pay are referred to as
annual
An interest rate, unless otherwise specified, is typically a(n)____________rate.
increase in assets and an increase in liabilities
Issuing a note payable for cash results in a(n) ______.
sales taxes payable of $100. sales revenue of $1,000.
Lester Corp. sells merchandise to a customer for $1,000. The company also collects state and local sales taxes of 6% and 4%, respectively. At the time of sale, Lester should record the following credit amounts.
current portion of long-term debt
The portion of a long-term liability that will be paid within the next year is referred to and reported as the:
False
True or false: Current liabilities are always payable within one year.