Chapter 10 Current Liabilities Concept Questions
Sales taxes collected by a retailer are recorded by a) crediting Sales Taxes Payable. b) debiting Sales Tax Expense. c) crediting Sales Taxes Revenue. d) debiting Sales Taxes Payable.
a) crediting Sales Taxes Payable.
Unearned Rent Revenue is a) reported as a current liability. b) a contra account to Rent Revenue. c) debited when rent is received in advance. d) a revenue account.
a) reported as a current liability.
A cash register tape shows cash sales of $1,800 and sales taxes of $126. The journal entry to record this information is a) Cash 1,926 Sales Revenue 1,926 b) Cash 1,926 Sales Taxes Payable 126 Sales Revenue 1,800 c) Cash 1,926 Sales Revenue 1,800 Sales Taxes Revenue 126 d) Cash 1,800 Sales Tax Expense 126 Sales Revenue 1,926
b) Cash 1,926 Sales Taxes Payable 126 Sales Revenue 1,800
On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared? a) Interest Expense 28,000 Interest Payable 28,000 b) Interest Expense 7,000 Interest Payable 7,000 c) Interest Payable 7,000 Interest Expense 7,000 d) Interest Expense 7,000 Notes Payable 7,000
b) Interest Expense 7,000 Interest Payable 7,000
On January 1, 2015, Howard Company, a calendar-year company, issued $900,000 of notes payable, of which $225,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is a) Long-term Debt, $900,000. b) Current Liabilities, $225,000; Long-term Debt, $675,000. c) Current Liabilities, $450,000; Long-term Debt, $450,000. d) Current Liabilities, $900,000.
b) Current Liabilities, $225,000; Long-term Debt, $675,000.
Employee payroll deductions include each of the following except a) insurance and pensions. b) federal unemployment taxes. c) FICA taxes. d) federal income taxes.
b) federal unemployment taxes.
Most companies pay current liabilities a) by issuing interest-bearing notes payable. b) out of current assets. c) by issuing stock. d) by creating long-term liabilities.
b) out of current assets.
Which one of the following payroll taxes does not result in a payroll tax expense for the employer? a) State unemployment tax b) Federal unemployment tax c) Federal income tax d) FICA tax
c) Federal income tax
From a liquidity standpoint, it is more desirable for a company to have current a) liabilities exceed long-term liabilities. b) liabilities exceed current assets. c) assets exceed current liabilities. d) assets equal current liabilities.
c) assets exceed current liabilities.
A current liability is a debt that can reasonably be expected to be paid a) out of cash currently on hand. b) out of currently recognized revenues. c) between 6 months and 18 months. d) within one year or the operating cycle, whichever is longer.
d) within one year or the operating cycle, whichever is longer.
