9/10 Accounting
Damien Co. has $10,000 of unearned revenues on its balance sheet. Damien expects that it will earn $8,000 of these revenues in the upcoming twelve months. How much will be recorded in Long-Term Liabilities?
$2,000
Wayland Company has total liabilities of $65,000 and total equity of $130,000. It's debt-to-equity ratio is
0.5
Jorge Lopez worked 40 hours this week and earned $1,000. Federal and state taxes, and other withholdings totaled $350. Jorge's net pay totals $.
650
Spot Co. purchases office supplies from Sally Supplies, Inc.. Spot does not pay cash for the purchase, and now owes the amount to Sally. This transaction would typically be recorded in which account in Spot's books?
Accounts Payable
A liability created by buying goods or services on credit is typically recorded to
Blank 1: accounts Blank 2: payable
Most bonds require (interest/par) value to be repaid at maturity and (interest/par) to be paid semiannually.
Blank 1: par Blank 2: interest
Many bonds are (sinking/secured) fund bonds, which reduces the holder's risk by requiring the issuer to set aside assets at specified amounts and dates to repay the bonds.
Blank 1: sinking
Which of the following statements is not an advantage of bond financing?
Bonds require interest payments and payment of par value.
Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future retirement, disability, and survivorship and medical expenses. Multiple choice question.
FICA
The federal Social Security system provides retirement, disability, survivorship, and medical benefits to qualified workers. Laws require employers to withhold _____ taxes from employees' pay to cover costs of the system. Multiple choice question.
FICA
Federal government taxes implemented on employers in order to provide unemployment benefits to qualified workers are known as (use acronym) .
FUTA
John Grey owns Grey's Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned revenue. To record the adjusting entry in November, when $4,000 has been earned, Grey will enter which of the following entries? (Check all that apply.)
Credit to Plowing Revenue Earned Debit to Unearned Plowing Revenue
KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12 sales tax with a credit to the Sales Tax account.
Payable
State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as:
SUTA
Which of the following items would be considered a current liability? (Check all that apply.)
Wages payable Accounts payable, terms n/30 Notes payable, due in 3 months
Bonds payable to whomever holds them are called _____ bonds or unregistered bonds. Multiple choice question.
bearer
A(n) is the issuer's written promise to pay an amount equaling the par value. The par value is paid at a specified future date. Most often, the issuer is required to make semiannual interest payments.
bond
Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance of this sales tax to the state government in November would include a credit to the account.
cash
Teva Co. has current period employee salary expense of $2,000. Employee withholdings total $850. To accrue the current period payroll, Salaries Payable will be (debited/credited) __________ in the amount of ___________.
credited; $1,150
Rachel Ryder is an employee working at Brand-Mart. Rachel earns $35,000 per year and claims three withholding allowances. The amount withheld from her paycheck, using this information, is called federal taxes.
income
The formula to compute the times interest earned is income before interest expense and income taxes divided by:
interest expense
Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) ______ account. Multiple choice question.
liability
Woods Co. has a note payable due in monthly installments over the next five years. This note will be reported under which of the following categories of the balance sheet? (Check all that apply.)
long-term liabilities current liabilities
Star Bank provided cash to a customer, J. Brown, to pay for a building. Star required that Brown also sign a(n) (mortgage/installment/bond) note payable, which allows the bank to be paid by the cash proceeds of the sale of the building if Brown fails to pay on the note.
mortgage
A bond is its issuer's written promise to pay an amount equaling the _____ value of the bond with interest.
par
The ________ value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond's maturity date.
par
Amounts withheld from an employee's gross pay are called:
payroll deductions
Bonds issued in the names and addresses of their holders are _______ bonds.
registered
Convertible bondholders have the right to convert their bonds to _____.
stocks
The ratio of income before interest expense (and any income taxes) divided by interest expense—which reflects the risk of covering interest commitments when income varies—is called the ____________ ratio. Multiple choice question.
times interest earned
The debt-to-equity ratio is computed as:
total liabilities/total equity
Examples of employee voluntary deductions may include all of the following except: Multiple choice question.
unemployment taxes.
Employers often withhold other 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.
voluntary deductions
Employers often withhold other 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.
voluntary deductions
A known liability arises from a situation with little uncertainty, with set agreements, contracts, or laws. These liabilities are measurable. Known liabilities would include all of the following items, except:
warranties
When recording a liability, a company may not know: (Check all that apply.)
when to pay. how much to pay. whom to pay.
Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $
1000
Jared's Co. has total assets of $60,000 and total liabilities of $40,000. Its debt-to-equity ratio is ____.
2.0
Which of the following is a disadvantage of bond financing?
Bonds require payment of periodic interest and the par value.
_____ bonds give the issuer the option to retire the bonds at a stated dollar amount before maturity.
Callable
bonds (and notes) have an option exercisable by the issuer to retire them at a stated dollar amount before maturity.
Callable
_______ bonds (and notes) have specific assets of the issuer pledged (or mortgaged) as collateral.
Secured
_______ bonds (and notes), also called debentures, are backed by the issuer's general credit standing.
Unsecured
Most bonds require par value to be repaid _______ and interest to be paid _________. Multiple choice question.
at the maturity date; semiannually
Bonds payable to whomever holds them are called _____ bonds or unregistered bonds.
bearer
Holders of bonds have the right to convert their bonds to stock. When conversion occurs, the bonds' carrying value is transferred to equity accounts and no gain or loss is recognized.
convertible
The ____ ratio helps assess the risk of a company's financing structure by dividing total liabilities by total equity. Multiple choice question.
debt-to-equity
Most employers are required to withhold ________ from an employee's paycheck. The amount withheld is computed using tables published by the IRS. The amount depends on the employee's annual earnings rate and the number of withholding allowances the employee claims.
federal income taxes
A measurable obligation arising from agreements, contracts, or laws is called a liability
known
A is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.
liability
Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to the Unearned Revenues, which is a(n) (asset/liability/equity) account.
liability
Obligations due after one year or one operating cycle, whichever is longer, are considered to be:
long-term liabilities
are amounts owed to suppliers for products or services purchased on credit.
Accounts payable
are amounts owed to suppliers for products or services purchased on credit. Multiple choice question.
Accounts payable
Anchor Co. has accrued payroll expense of $1,300 which includes employee withholdings of $400. On payday, Anchor will record the distribution of paychecks with a credit to in the amount of $
Blank 1: Cash Blank 2: 900
Harvey Co. has current period employee salary expenses of $800. Employee withholdings total $300. The entry to accrue current period payroll will include a credit to Salaries in the amount of $
Blank 1: Payable Blank 2: 500
Which of the following statements are disadvantages of bond financing? (Check all that apply.)
Bonds can decrease return on equity. Bonds require payment of interest and par value.
Which of the following statements is an advantage of bond financing?
Bonds do not affect owner control.
Zilo Co. has accrued employee salary expense of $1,000 which includes employee withholdings that total $300. On payday, Zilo will record the payment with which of the following entries? (Check all that apply.)
Credit to Cash for $700. Debit to Salaries Payable for $700.
Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry to record the $5 sales tax would require which of the following?
Credit to Sales Tax Payable
John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, Grey will enter which of the following entries? (Check all that apply.)
Credit to Unearned Plowing Revenue Debit to Cash
_______ bonds (and notes) mature at more than one date (often in series) and, thus, are usually repaid over a number of periods.
Serial
_____ bonds (and notes) are scheduled for maturity on one specified date.
Term
Which of the following is a true statement concerning the employer FICA taxes:
The employer must pay FICA tax in an amount equal to that paid by the employee.
True or false: A liability can be recorded, even if there is uncertainty of when to pay, how much to pay, or whom to pay.
True
Amounts received in advance from customers for future products or services are typically recorded in a liability account called _______.
Unearned Revenues
A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned will include a credit to which account?
Unearned Subscription Revenue
Which of the following liabilities could be a multi-period known liability? (Check all that apply.) Multiple select question.
Unearned Subscription Revenues Notes Payable
Teva Co. has current period employee salary expense of $2,000. Employee withholdings total $850. To accrue the current period payroll, Salaries Payable will be (debited/credited) __________ in the amount of ___________. Multiple choice question.
credited; $1,150
A liability is a liability due to be paid or settled within one year or the company's operating cycle, whichever is longer.
current
FICA and unemployment taxes are examples of (employee/employer) Unavailable taxes.
employer
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
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. Multiple choice question.
liability
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.
long-term liability
The par value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond's date.
maturity
A(n) _______ is a legal agreement that helps to protect a lender if a borrower fails to make required payments on notes or bonds. This agreement gives the lender the right to be paid from the cash proceeds of the sale of the borrower's assets, as identified in the agreement. Multiple choice question.
mortgage
Unearned subscription revenues often consist of liabilities that will come due within one year and beyond one year. This is an example of a _______ known liability. Multiple choice question.
multi-period
Gross pay minus all deductions—including federal and state taxes, FICA and any voluntary deductions—equals pay.
net
Lyle Co. borrowed $20,000 from First Bank by signing a written promise to pay a definite sum of money on a specific future date. Lyle will record this in the general ledger as a(n) payable
note
A _____ _____ is similar to a bond payable but is normally transacted with a single lender such as a bank.
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.
short-term note payable
Many bonds are _______, which reduces the holder's risk by requiring the issuer to set aside assets at specified amounts and dates to repay the bonds.
sinking fund bonds
Convertible bondholders have the right to convert their bonds to _____. Multiple choice question.
stocks
Damen's Co. sells merchandise with a list price of $500 and collects sales tax of $50. The sales tax would be recorded with a credit to which account?
Sales Tax Payable
Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?
Sales tax payable
Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $.
1,000
Kenesha Co. reported income before interest expense and income taxes of $30,000; interest expense of $3,000; and income taxes of $4,000. Calculate the times interest earned ratio. Multiple choice question.
10
The federal government requires that employers are taxed on employee wages to provide unemployment benefits to qualified workers. These taxes are known as:
FUTA
_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.
Gross pay
Which of the following formulas is used to compute the times interest earned?
Income before interest expense and income tax/interest expense
FICA tax includes both Social Security tax and _____.
Medicare tax
Which of the following items is not a payroll deduction?
Net pay
Which of the following items is not a payroll deduction? Multiple choice question.
Net pay
Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to SUTA (expense/payable) until payments are submitted to the state.
Payable
The journal entry to record employer tax accruals includes a debit to:
Payroll Tax Expense
Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?
SUTA
State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as (use acronym)
SUTA
Stalz Co. collected $2,500 in sales tax from customers during the month of February. In March, Stalz sends the $2,500 to the state government. The payment to the state would be recorded with a debit to which account?
Sales Tax Payable
