liabilities accounting

A contract in which an owner provides a user the right to use an asset in return for periodic cash payments over a period of time is called a(n)

lease

Amounts that are subtracted from an employee's gross pay are referred to as

payroll withholdings.

A(n)______ payable is a short-term liability that occurs when a company purchases goods and does not immediately pay with cash. (Enter only one word.)

accounts or account

Liabilities are classified as

current and long-term.

Debt is considered a lower cost method of financing than equity because

interest on debt is tax deductible.

Select all that apply The two types of financing are

debt financing. equity financing.

_____ financing refers to obtaining investment from stockholders. (Enter only one word.)

equity

A(n)____ is a probable future sacrifice of economic benefits arising from present obligations to transfer assets or provide services as a result of past transactions or events. (Enter one word per blank)

liability

Select all that apply Which of the following are included in FICA taxes?

A 6.2% social security tax A 1.45% Medicare tax

In order to expand its business, Mueller Inc. is borrowing $1 million from its bank. Mueller is utilizing this type of financing:

Debt

Select all that apply Periodic payments on installment notes typically include (Select all that apply.)

a portion that reflects interest. a portion that reduces the outstanding loan balance.

Select all that apply Which of the following are methods of long-term financing with debt?

Bonds Leases Notes payable

Select all that apply Withholding taxes for federal and state income tax are based upon which items?

Number of exemptions claimed Amounts earned by employees

Select all that apply Which of the following are correct regarding bonds?

They obligate the issuing company to pay a specific amount. They obligate the issuing company to repay the bonds at a specific date.

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)

accounts payable.

A company's capital structure refers to

the mixture of debt and equity used to finance the company.

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:

$800 Reason: $20,000 x 0.08 x 6/12

Select all that apply Which of the following are current liabilities?

Wages payable Accounts payable Note payable due in 3 months

Select all that apply Which of the following are employer payroll costs?

Federal and state unemployment taxes Employer portion of Medicare tax

Select all that apply Which of the following are not required to be deducted from an employee's paycheck?

Federal unemployment tax (FUTA) State unemployment tax (SUTA) Charitable contributions

Select all that apply What are the two classifications for liabilities?

Current Long-term

Notes payable is classified as a liability that has which of the following effects?

Creates interest expense on the income statement

Liabilities that are payable within one year commonly are classified as_________ liabilities, while those payable more than one year from now commonly are classified as ________liabilities.

current long term

Correctly match the salary-related costs with the payee.

Employee ----> Choice, State and federal income tax State and federal income tax Employer ----> State and federal unemployment tax

Select all that apply Which of the following are payroll withholdings that are subtracted from gross pay to arrive at take-home pay?

Employee contributions to retirement plans Federal income taxes Health insurance paid by the employee

_____ has grown into the most popular method of external financing of corporate assets in America. (Enter one word per blank.)

Leasing, Renting, or Lease

Select all that apply Which of these payroll taxes are paid by the employer and the employee? (Check all that apply.)

Medicare Social Security

Obtaining a note payable for cash results in a(n) ______.

increase in assets and an increase in liabilities

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

$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.

Volker Company signs a 3-month, $10,000 note. Stated interest rate is 12% payable at the maturity date. Interest incurred on the note is:

$300 Reason: $10,000 x 0.12 x 3/12

Select all that apply Which of the following are long-term liabilities?

20-year mortgage payable Note payable due in 3 years

In order to expand its business, Mueller Inc. is selling $10 million in common stock. Mueller is utilizing this type of financing:

Equity

Select all that apply Which of these payroll taxes are paid only by the employer? (Check all that apply.)

FUTA SUTA

Choose the correct formula for calculating interest.

Face amount x annual interest rate x fraction of the year

True or false: Your employer is allowed to keep the amounts withheld from your gross pay.

False

FICA is the acronym for the

Federal Insurance Contribution Act.

Select all that apply Which of the following are possible benefits of leasing an asset rather than purchasing an asset?

Protection against declining asset value Improvement in cash flows Lower periodic payments on the asset

A formal debt instrument that obligates the borrower to repay a stated amount (referred to as the principal or face amount) at a specified maturity date can be a note or a(n)

bond

A corporation that wishes to borrow from the general public rather than a bank will issue

bonds

The mixture of debt financing and equity financing a company uses is referred to as the company's _____ structure.

capital

____ financing refers to borrowing money from creditors.

debt

Select all that apply Payroll withholdings ______. (Select all that apply.)

decrease the amount of cash an employee receives are amounts subtracted from employees' gross earnings to determine their net pay

Select all that apply Which of the following payroll-related costs are incurred by employees?

employee investments in retirement plans federal and state income tax

We record interest expense in the period in which we

incur it.

Interest expense is recorded in the period when it is _____

incurred, incur, or incured

Interest expense is recorded in the period when it is ______

incurred, incur, or incured

Loans requiring periodic payments of interest and principle are referred to as ____ notes.

installment, instalment, installments, or installement

On December 1, Milka Inc. borrows $500,000 from the bank. Interest of 6% is due in six months. On December 31, Milka recognizes interest. As a result of this journal entry, Milka's income statement reports:

interest expense for one month

An advantage to financing with debt is that

interest is tax deductible

On December 1, Milka Inc. borrows $500,000 from the bank. Interest of 6% is due in six months. On December 31, Milka recognizes interest. As a result of this journal entry, Milka's balance sheet reports:

interest payable for one month

A(n) _____is a contractual arrangement in which an owner provides a user the right to use an asset for a specified period of time. (Enter one word per blank)

lease

In the U.S., the most popular method for financing corporate long-term assets is:

leasing

Improved cash flows is a common advantage of acquiring equipment through ____

leasing or lease

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)

liability

Payroll withholdings are

the items subtracted from an employee's gross pay to arrive at take-home pay.