accounting learn smart chapter 9

Janie Jones earns a monthly salary od 6,000. Janie's total withholdings amount to 1,200. based on this information, the journal entry to record the payment of salary expense for Janie would include: a. a debit to case for 4,8000 b. credit to salaries payable for 6,000 c. credit to cash for 4,800 d. credit to various liabilities for 1,200 e. debit to salary expense for 6,000

c. credit to cash for 4,800 d. credit to various liabilities for 1,200 e. debit to salary expense for 6,000

paying off a sales tax liability would affect which of the following financial statements? a. statement of changes in stockholder equity b. income statement c. statement of cash flows d. balance sheet

c. statement of cash flows d. balance sheet

payroll tax expense is incurred by a. state & federal governments b. the employee only c. the employer only d. both the employer & the employee

c. the employer only

the journal entry to recognize repaying the principal of a note payable includes a ______ to the cash account & a ____ to the noted payable account

credit, debit

which of the following represents a voluntary employee withholding? a. medicare withholdings b. income tax withholding c. social security withholdings d. charity withholdings

d. charity withholdings

employers determine each employee's net pay by _____ the withholdings to/from the gross earnings

deducting

when a business pays an individual for a specific service, but the individual supervises & controls the work, then that individual is considers to be a(n) _____ _______

independent contractor

in a note containing the terms of a lending transaction, the borrower is called the ____ & the lender is called the ______

issuer, payee

the likelihood of a future obligation arising is remote,

no liability is shown in the financial statements or related notes

west company experienced an accounting event that caused liabilities, assets, & cash flow form operating activities to decrease. which of the following events could have caused these effects? a. paying a warranty claim b. paying off accrued interest payable c. recognizing warranty expense d. recognized accrued interest expense

paying a warranty claim paying off accrued interest payable

True or false: Fringe benefits are reported as expenses on the employer's financial statements

true

the journal entry to recognize a warranty obligation includes:

- credit to warranty payable account - debit to warranty expense account.

the journal entry to recognize accrued vacation pay includes:

- debit to an expense account - credit to a liability account

if a company has total assets of 2,500,000, current assets of 435,000, total liabilities of 1,575,000, & current liabilities of 320,000, what is its current ratio?

1.33 to 1

Mr. Wallace earns a month salary of 6,000. Mr. Wallace's withholding for income taxes is 650/ month. his. month voluntary withholdings include 250 for medical in surname & 20/month for the Red Cross.Assume a social security tax rate of 6%, a medicare tax rate of 1.5% & an unemployment tax rate of 6% on the first 7,000 of income. based on this information, Mr. Wallace's net pay for January 31, year 1 is:

4,630

Assume three companies in the same industry have the following current ratios: Adams co=1.33 to 1 Baker co=1.15 to 1 Charles co=1.27 to 1 based on this information alone, which company appears to have the lowest liquidity

Baker

Simms Accountants charged a clint 2,000 cash plus tax fro service provided in a state where the service sales tax rate is 6%. as a result of this event, Simms would recognize: a. a 210 liability on the blanche sheet b. a 2,120 increase in total assets c. zero cash flow from operating activities d. 2,000 of service revenue

a. 120 liability on the balance sheet b. 2,120 increase in total assets d. 2,000 of service revenue

the accrued interest payable account will appear on which of the following financial statements? a, balance sheet b. statement of changes in stockholders' equity c. statement of cash flows d. income statement

a. balance sheet

the warranties payable account appears on which of the following financial statements? a. balance sheet b. statement of changes in stockholders' equity c. income statement d. statement of cash flows

a. balance sheet

warranties normally: a. cover a specific time period b. are based on estimates c. guarantee repair or replacement d. have indefinite lives

a. cover a specific time period b. are based on estimates c. guarantee repair or replacement

the primary purpose of classified balance sheets I to distinguish between: a. current & concurrent liabilties b. notes & bonds payable c. tangible & intangible assets d. operating & non-operating assets d. current & long-term assets

a. current & concurrent laibitlities d. current & long-term assets

which of the following forms is used to document the number of withholding allowances claimed by an employee? a. form w-4 b. form 941 c. form w-2 d. form 1040

a. form w-4

which of the following would be classified as a general uncertainty? a. potential storm damage b. potential decline in earrings due to competition c. potential loss due to legal liability d. potential warranty claims

a. potential storm damage b. potential decline in earnings due to competition

the recognition of accrued payroll tax expense will cause: a. retuned earnings to decrease b. liabilities to increase c. a cash outflow in the operating activities section of the statement of cash flows d. net income to increase

a. retained earnings to decrease b. liabilities to increase

how will borrowing money by issuing a note payable affect a company's ledger accounts? a. the balance of the Cash account increases b. the balance of the Notes Payable account decreases c. the balance of the Notes Payable accounts increases d. the balance of the Cash account decreases

a. the balance of the Cash account increases c. the balance of the Note Payable account increases

A company experiences an event that caused assets, liabilities, & cash flow form financing activities to increase,e but had no affect on net income. which of the following events could have caused these effects? a. loaning money with a three year term to maturity b. borrowing money with a two year term maturity c. repaying the principal balance of a loan d. collections the principal balance of a note receivable

b. borrowing money with a two year term to maturity

the journal entry to recognize a cash sales event that included sales tax would require a : a. debit to the sales tac payable account b. credit to the sales revenue account c. credit to the sales tax payable account d. debit to the cash account

b. credit to the sales revenue account c. credit to the sales tax payable account d. debit to the cash account

which of the following statements is true? a. companies with lower debt to assets ratios are always risker investments that companies with higher debt to assets rations b. investment risk cannot be determined inly by looking at the debt to assets ration c. companies with higher debt to assets ratios are always risker investments than companies with lower debt to assets ratios

b. investment risk cannot be determined only by looking at the debt to assets ratio

if the likelihood of a future obligation arising is remote, a. the estimated amount must be disclosed in the n notes to the financial statements b. no liability is shown in the financial statements or related notes c. the estimated amount I shown as an expense on the Income Statement d. a liability must be reported on the Balance Sheer

b. no liability is shown in the financial statements or related notes

the average time it takes a business to convert cash to inventory, inventory to accounts receivable, & accounts receivable back to cash is commonly called the ____ cycle a. financing b. operating c. investing

b. operating

which of the following taxes provides for old age, survivors & disability insurance? a. medicare tax b. social security taxes c. property taxes d. income taxes

b. social security taxes

Janie Jones earns a monthly salary of 6,000. assume a social security tax rate if 6% medicare tax of 1.5% & unemployment tax rate of 6% on the first 7,000 of earned income. the journal entry on January 31, Year 1, to record accrued payroll tax expense would include a a. credit to cash for 6,000 b. credit to salaries payable 6,000 c. credit to cash for 810 d. credit to payroll tax expense for 810 e. credit to various liabilities for 810

e. credit to various liabilities for 810

gross ____ is the sum of regular pay plus any bonuses, overtime, or other additions

earnings

other things being equal, the higher a company's current ratio, the _____ its liquidity

higher

Recognizing a cash revenue event that is subject to state sales tex will cause an _____ in the Cash account; an ______ in the Sales Tax Payable account; & a _____ in the revenue account

increase, increase, increase

on August 1, Year 1, Star Company borrowed money from Moon Company. Due to the December 31, Year 1 adjustment to recognizer ice accrued interest on Star's books, the balance in the Interest Expense account ____ & the balance in the Interest Payable account ____

increases, increases

when a company recognizes a contingent liability for warranties the balance in the Warranty Expense account ______ & the balance on the Warranties Payable account ____.

increases, increases