Chapter 7-9

Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future retirement, disability, survivorship and medical benefits. Multiple choice question. SUTA Reason: SUTA is an employer expense. FICA FUTA Reason: FUTA is an employer expense. WICA Reason: This is a made up response.

FICA

The federal government requires that employers are taxed on employee wages to provide unemployment benefits to qualified workers. These taxes are known as: Multiple choice question. SUTA Reason: SUTA is State Unemployment Taxes Payable. FICA Reason: FUTA. FUTA SICA Reason: This is a made up account name.

FUTA

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as: Multiple choice question. SUTA FICA SICA FUTA Reason: FUTA relates to Federal unemployment benefits. SUTA relates to statement unemployment benefits.

SUTA

A(n) ____________ is a supplementary record created to maintain a separate account for each customer. specific ledger accounts payable ledger general ledger accounts receivable ledger

accounts receivable ledger

The factors necessary to compute depreciation include all of the following, except: Multiple choice question. cost. salvage value. book value. Reason: The factors that determine depreciation are cost, salvage value, and useful life. useful life.

book value

Which of the following items would be considered a current liability? (Check all that apply.) Multiple select question. Accounts payable, terms n/30 Wages payable Notes payable, due in 3 months Notes payable, due in 14 months

Accounts payable, terms n/30 Wages payable Notes payable, due in 3 months

Which depreciation method will compute the most depreciation expense over the life of the asset? Multiple choice question. All methods will produce equal depreciation expense over the life of the asset. Declining-balance will produce the most depreciation expense. Units-of-production will produce the most depreciation expense. Straight-line will produce the most depreciation expense.

All methods will produce equal depreciation expense over the life of the asset.

Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.) Multiple select question. Assembling Fines incurred for failing to get the correct permits Repairs necessary for damages incurred during installation Shipping charges Testing

Assembling Shipping charges Testing

Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional four years. The entry to record this purchase would include a debit to the _______ account. Multiple choice question. Repairs & Maintenance Expense Depreciation Expense - Equipment Equipment Cash

equipment

Amounts withheld from an employee's gross pay are called: Multiple choice question. net pay payroll deductions wages payable bonus deductions

payroll deductions

The expected proceeds from accounts receivable, determined by taking accounts receivable less the allowance for doubtful accounts, is called: Multiple choice question. accounts receivable turnover realizable value contra receivables total receivables

realizable value

A _________________ is an amount due from another party. receivable return sale payable

receivable

1. It is probable that Huprey will lose a pending lawsuit. Hurey can reasonably estimate the number of damages to be paid if it loses the lawsuit.

record a liability no disclosure disclose in notes

2. Huprey is very unlikely to lose a pending lawsuit. Huprey cannot reasonably estimate the amount of damages to be paid if it loses the lawsuit.

record a liability no disclosure disclose in notes

3. It is reasonably possible that Huprey will lose a pending lawsuit. The loss cannot be estimated.

record a liability no disclosure disclose in notes

A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a __________. - short term note payable - short term account payable short term note receivable - short term note receivable - long term note payable - long term account payable

short term note payable

Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now. As a result of this transaction, Cadie would record a(n) ________ on her balance sheet. Multiple choice question. account payable long-term note payable short-term note payable prepaid expense

short-term note payable

The allowance for doubtful accounts is a contra asset account that equals: Multiple choice question. total short-term assets total accounts receivable total uncollectible accounts

total uncollectible accounts

True or false: The book value of an asset when using straight-line depreciation is always greater than the book value from using double-declining-balance, except at the beginning and end of the asset's useful life, when it is the same. True false question.TrueFalseReason: Declining-balance will always produce more depreciation expense in earlier years which will result in a lower book value.

true

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? Multiple choice question. Unemployment Insurance premiums State taxes Federal taxes FICA

unemployment

The method of depreciation that charges a varying amount to depreciation expense for each period depending on its usage is called the _________ method. Multiple choice question. MACRS declining-balance Reason: The declining balance method is not based on usage. The units-of-production method varies based on usage. straight-line units-of-production

units-of-production

Employers often withhold amounts from employees' earnings which arise from employee requests, contracts, unions, or other agreements. These withholdings are called employee __________ and include items such as medical premiums. Multiple choice question. FICA taxes voluntary deductions unemployment taxes income taxes

voluntary deductions

Employee income tax depends on: (Check all that apply). Multiple select question. employee's income number of employee withholding allowances employer's income number of employer withholding allowances

- employee's income - number of employees withholding allowances

Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $

1000

Conroy Company uses the allowance method to account for bad debts. During the year, Conroy determined that a balance of $200 from Alegia Co. was uncollectible and wrote the balance off. What is the total decrease to net income related to this entry? $0 Cannot be determined Reason: The decrease in net income occurs when bad debts is estimated (allowance account is increased). This entry reduces accounts receivable using the allowance account. $200 Reason: The decrease in net income occurs when bad debts is estimated (allowance account is increased). This entry reduces accounts receivable using the allowance account.

$0

Conroy Company uses the allowance method to account for bad debts. During the year, Conroy determined that a balance of $200 from Alegia Co. was uncollectible and wrote the balance off. What is the total decrease to net income related to this entry? Multiple choice question. $0 Cannot be determined Reason: The decrease in net income occurs when bad debts is estimated (allowance account is increased). This entry reduces accounts receivable using the allowance account. $200 Reason: The decrease in net income occurs when bad debts is estimated (allowance account is increased). This entry reduces accounts receivable using the allowance account.

$0

Yates Co. uses the allowance method to account for bad debts. At the end of the period, Yate's unadjusted trial balance shows an accounts receivable balance of $10,000; allowance for doubtful accounts balance of $400 (credit); and sales of $500,000. Based on history, Yates estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of: $1,400 Reason: Since this is based on a percentage of sales, you should simply multiply $500,000 x .01 = $5,000. $4,600 Reason: Since this is based on a percentage of sales, you should simply multiply $500,000 x .01 = $5,000. For percentage of sales method, you do not adjust for a previous balance in the allowance account. $5,000 $600 Reason: Since this is based on a percentage of sales, you should simply multiply $500,000 x .01 = $5,000. $5,400 Reason: Since this is based on a percentage of sales, you should simply multiply $500,000 x .01 = $5,000.

$5,000

Ana Co. uses the allowance method to account for bad debts. At the end of the period, Ana's unadjusted trial balance shows an accounts receivable balance of $40,000; allowance for doubtful accounts balance of $300 (credit); and sales of $500,000. Based on history, Ana estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of: Multiple choice question. $500 $800 Reason: $40,000 x 2%=800-300=$500 $10,000 Reason: $40,000 x 2%=800-300=$500 $1,100 Reason: $40,000 x 2%=800-300=$500 $9,700 Reason: $40,000 x 2%=800-300=$500 $10,300 Reason: $40,000 x 2%=800-300=$500

$500

Flash Co. uses the allowance method to account for bad debts. At the end of the year, Flash Co.'s unadjusted trial balance shows an accounts receivable balance of $45,000; allowance for doubtful accounts balance of $400 (debit); and sales of $1,500,000. Based on history, Flash estimates that bad debts will be 0.5% of sales. The entry to record estimated bad debts will include an debit to Bad Debts Expense in the amount of: Multiple choice question. $7,500 $750,000 Reason: When allowance method is based on sales, do not take into account previous balance in the allowance account. $1,500,000x.005=$7,500. $7,900 Reason: When allowance method is based on sales, do not take into account previous balance in the allowance account. $1,500,000x.005=$7,500. $795,000 Reason: When allowance method is based on sales, do not take into account previous balance in the allowance account. $1,500,000x.005=$7,500. $7,100 Reason: When allowance method is based on sales, do not take into account previous balance in the allowance account. $1,500,000x.005=$7,500.

$7500

FICA tax includes both Social Security tax and _____. Multiple choice question. Federal tax Medicare tax State unemployment tax Federal unemployment tax

Medicare tax

Which of the following items is not a payroll deduction? Multiple choice question. FICA taxes Net pay Employee income tax Federal income tax

Net pay

_______ are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life. Multiple choice question. Extraordinary repairs Capital repairs Betterments Ordinary repairs

Ordinary repairs

The journal entry to record employer tax accruals includes a debit to: Multiple choice question. SUTA Payable Reason: The debit is to Payroll Tax Expense. SUTA Payable would be credited. Payroll Tax Expense FUTA Payable Reason: The debit is to Payroll Tax Expense. FUTA Payable would be credited. Salaries Expense Reason: The debit is to Payroll Tax Expense.

Payroll Tax Expense

Which of the following contingent liabilities would require a company to record a note to the financial statements? (Check all that apply.) Multiple select question. The liability is remote and cannot be estimated. Reason: A remote contingent liability is not recorded. The liability is possible and is estimated to be $35,000. The liability is remote and estimated to be $15,000. Reason: A remote contingent liability is not recorded. The liability is probable and cannot be reasonably estimated. The liability is possible and cannot be reasonably estimated. The liability is probable and estimated to be $40,000. Reason: This situation would require a journal entry.

The liability is possible and is estimated to be $35,000. The liability is probable and cannot be reasonably estimated. The liability is possible and cannot be reasonably estimated.

Plant assets are recorded at cost, which includes all expenditures necessary to get the asset in place and ready for use. All of the following would be included as part of the cost of a plant asset except: Multiple choice question. damage done when unpacking the plant asset costs to customize the new plant asset cost to purchase the new plant asset costs to modify the new plant asset

damage done when unpacking the plant asset

At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a: Multiple choice question. debit to Accounts Receivable and credit to Bad Debts Expense debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts debit to Bad Debts Expense and credit to Accounts Receivable debit to Allowance for Doubtful Accounts and credit to Bad Debts Expense

debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

Which of the following represent reasonably possible contingent liabilities? Select all that apply. Multiple select question. warranties Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. debt guarantees Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. accounts payable Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. potential legal claims Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible.

debt guarantees potential legal claims

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid. Multiple choice question. current liability current asset long-term asset long-term liability

long-term liability

True or false: The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation True false question.TrueReason: Costs should not include repairs to damages or errors incurred after installation. False

false

_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes. - payroll reductions - net pay - gross pay - hourly rate

gross pay

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) ________ account.

liability

Obligations due after one year or one operating cycle, whichever is longer, are considered to be: - long term assets - short term assets - operating liabilities - operating assets - long term liabilities - long term liabilities - short term liabilities

long term libailites

Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace's operating cycle is 14 months. This note would be considered a ______ on the balance sheet. Multiple choice question. long-term asset short-term asset long-term liability short-term liability long-term equity short-term equity

long-term liability