Accounting, Chapter 8, Hayes
Which of the following must employers by law withhold from their employees' pay? - Health insurance contributions - unemployment taxes - Federal income taxes - contributions toward retirement funds
Federal income taxes
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 - debit notes payable $5,000. - credit notes expense $5,000. - credit notes payable $5,000. - debit notes receivable $5,000.
credit notes payable $5,000.
Deferred revenues and sales tax payable typically are reported as ___ liabilities.
current
The ___ portion of long-term debt is the amount that will be paid within the next year
current
Liabilities are classified as - revenues and expenses. - current and long-term. - operating and investing. - operating and nonoperating.
current and long-term
Amounts that are subtracted from an employee's gross pay are referred to as - payroll taxes. - payroll withholdings. - net pay. - employee costs.
payroll withholdings.
An end-of-period adjusting entry that debits Deferred Revenue most likely will credit a(n) ______ account. - revenue - asset - liability - expense
revenue
Taxes subtracted from employees' pay and remitted to the government on their behalf are called - employer payroll taxes. - remittance payment taxes. - retirement contribution taxes. - withholding taxes.
withholding taxes.
Which of the following payroll-related taxes must the employer pay by law? - Contributions toward retirement funds - Union dues - Federal Insurance Contributions Act amounts - Unemployment taxes
- Federal Insurance Contributions Act amounts - Unemployment taxes
A contingent liability is an existing ___ situation that might result in a loss depending on the outcome of a future event.
uncertain
Which of these payroll taxes are paid only by the employer? - FUTA - Social Security - Medicare - SUTA
- FUTA - SUTA
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 - $20,000 x 0.08 x 6 - $20,000 x 0.08 x 6/12
$20,000 x 0.08 x 6/12
Which of the following are included in FICA taxes? - A 6.2% FUTA tax - A 6.2% social security tax - A 1.45% Medicare tax - A 5.4% SUTA tax
- A 6.2% social security tax - A 1.45% Medicare tax
Which of the following are not required to be deducted from an employee's paycheck? - Federal income tax - Charitable contributions - State unemployment tax (SUTA) - Social Security - Federal unemployment tax (FUTA) - Medicare taxes
- Charitable contributions - State unemployment tax (SUTA) - Federal unemployment tax (FUTA)
What are the two classifications for liabilities? - Operating - Investing - Current - Long-term - Recurring
- Current - Long-term
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? - Credit to Note Payable $106,000 - Debit to Cash $100,000 - Credit to Note Payable $100,000 - Debit to Interest Expense $6,000
- Debit to Cash $100,000 - Credit to Note Payable $100,000
Common current liabilities include: - Prepaid insurance - Notes payable due in two years - Deferred revenues - Sales tax payable - The current portion of long-term debt
- Deferred revenues - Sales tax payable - The current portion of long-term debt
Which of the following are payroll withholdings that are subtracted from gross pay to arrive at take-home pay? - Health insurance paid by the employee - Employer contribution for social security taxes - Employee contributions to retirement plans - Federal income taxes - Federal and state unemployment taxes
- Health insurance paid by the employee - Employee contributions to retirement plans - Federal income taxes
Identify characteristics of notes payable that are not common to accounts payable. - Usually classified as current liability - Interest bearing - Does not arise from past transaction - Based on promissory note
- Interest bearing - Based on promissory note
Payroll withholdings ______. - increase the amount of cash an employee receives - are voluntary - are amounts subtracted from employees' gross earnings to determine their net pay - decrease the amount of cash an employee receives - are amounts added to employees' gross earnings to determine their net pay
- are amounts subtracted from employees' gross earnings to determine their net pay - decrease the amount of cash an employee receives
Which of the following payroll-related costs are incurred by employees? - contributions to state unemployment taxes - contributions to federal unemployment taxes - employee investments in retirement plans - federal and state income tax
- employee investments in retirement plans - federal and state income tax
Which of the following are examples of fringe benefits provided by employers to their employees? - payment of insurance premiums on employees behalf - contributions to retirement and other savings accounts - payment for services provided by employee to employer - reduced or no-cost company-provided services - FICA matching contributions
- payment of insurance premiums on employees behalf - contributions to retirement and other savings accounts - reduced or no-cost company-provided services
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? - A debit to Cash of $300 and a credit to Deferred Revenue of $300. - A debit to Deferred Revenue of $300 and a credit to Cash of $300. - A debit to Cash of $300 and a credit to revenue of $300. - A debit to Revenue of $300 and a credit to Cash of $300.
A debit to Cash of $300 and a credit to Deferred Revenue of $300.
Notes payable is classified as a liability that has which of the following effects? - Creates an asset on the balance sheet - Creates deferred revenue on the income statement - Creates revenue on the income statement - Creates interest expense on the income statement
Creates interest expense on the income statement
Choose the correct formula for calculating interest. - Face amount x annual interest rate x fraction of the year - Present value x rate per interest period - Face amount x rate per interest period
Face amount x annual interest rate x fraction of the year
Your employer is allowed to keep the amounts withheld from your gross pay. - True - False
False
A(n) ___ payable results from an agreement with a supplier to pay within 30 to 60 days, whereas a(n) ___ payable is a signed contract that promises to pay a specific amount with interest at a specific maturity date.
account notes
A(n) ___ payable is a short-term liability that occurs when a company purchases goods and does not immediately pay with cash.
accounts
An interest rate, unless otherwise specified, is typically a(n) ___ rate
annual
The feature that distinguishes loss ___ from other liabilities is the uncertain outcome.
contingencies
Additional benefits such as health insurance, retirement benefits, or life insurance that are paid by the employer are called ___ benefits.
fringe
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.
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) - asset. - liability. - expense. - loss.
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) - loss. - expense. - liability. - asset.
liability.
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. - sales taxes payable of $100. - sales revenue of $1,100. - sales revenue of $1,000.
sales taxes payable of $100. sales revenue of $1,000.
Payroll withholdings are - the employer's portion of taxes paid for social security and Medicare. - the payments submitted for both the employee and employer to the government for taxes. - the items subtracted from an employee's gross pay to arrive at take-home pay.
the items subtracted from an employee's gross pay to arrive at take-home pay.
The employer's portion of FICA tax remitted to the taxing authority is: - the same as the employee's portion - higher than the employee's portion - lower than the employee's portion
the same as the employee's portion
Which of the following are employer payroll costs? - Federal and state unemployment taxes - Employee contributions to retirement savings - Federal income tax withholding - Employer portion of Medicare tax
- Federal and state unemployment taxes - Employer portion of Medicare tax
By law, an employer is required to pay which of the following amounts as payroll taxes? - Life insurance premiums - Federal unemployment tax - Social Security contributions - Health insurance premiums - Medicare contributions
- Federal unemployment tax - Social Security contributions - Medicare contributions
Obtaining a note payable for cash results in a(n) ______. - increase in liabilities and a decrease in stockholders' equity - decrease in assets and an increase in liabilities - decrease in assets and a decrease liabilities - increase in assets and an increase in liabilities
increase in assets and an increase in liabilities
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) - notes receivable. - accounts payable. - accounts receivable. - notes payable.
accounts payable.
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) - annual, 12 month rate. - 6 month rate. - a 3 month rate.
annual, 12 month rate.
Obtaining a note payable for cash results in a(n) ______. - decrease in assets and a decrease liabilities - increase in assets and an increase in liabilities - decrease in assets and an increase in liabilities - increase in liabilities and a decrease in stockholders' equity
increase in assets and an increase in liabilities