accounting chapter 9

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.

10

The form an employer files and submits to the IRS to report FICA tax information is Form

941

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

________ are amounts owed to suppliers for products or services purchased on credit.

Accounts payable

Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. The entry to record this cash receipt would include the following entries? (Check all that apply.) Multiple select question. Debit to Cash Debit to Unearned Paving Fees Credit to Cash Debit to Paving Fees Earned Credit to Paving Fees Earned Credit to Unearned Paving Fees

Debit to Cash Credit to Unearned Paving Fees

Select all that apply Star Co. reported $10,000 of net income during the month of January. Star estimates that it owes income taxes of $2,000 for the month. The month-end adjusting entry to record this estimate would require which of the following entries? (Check all that apply.) Multiple select question. Debit to Income Tax Expense Credit to Cash Credit to Income Taxes Payable Credit to Income Tax Expense Debit to Income Taxes Payable Debit to Cash

Debit to Income Tax Expense Credit to Income Taxes Payable

Simar Sales Co. sells and installs kitchen appliances. Simar guarantees parts and labor for one year after installation. Simar would record potential claims in a(n) _______ account.

Estimated Warranty Liability

Which of the following situations is not a contingent liability?

Future natural disaster

Each month, a corporation will accrue income taxes based on the month's earnings. To record the income tax for the month, the company will debit the Income Tax Expense account and credit the ________ account.

Income Taxes Payable

Which of the following liabilities could be a multi-period known liability? (Check all that apply.) Multiple select question. Notes Payable Unearned Subscription Revenues Wages Payable Accounts Payable

Notes Payable Unearned Subscription Revenues

Which of the following liabilities could be a multi-period known liability? (Check all that apply.) Multiple select question. Notes Payable Wages Payable Accounts Payable Unearned Subscription Revenues

Notes Payable Unearned Subscription Revenues

Which of the following items are considered employee benefits? (Check all that apply.)

Pension plans Medical insurance

Employee ________ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance.

benefits

A ___________ is when an employer provides employees with a percentage of the company's net income earned during the year.

bonus plan

Angela Bennett is an employee of Marks Co. This past year, Angela received 1% of Marks net income, in addition to her annual salary. This added benefit is called a:

bonus plan

When a company guarantees the payment of debt owed by a supplier, customer or another company, the guarantor usually discloses the guarantee as a ______________ liability.

contingent

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid.

current liability

Unemployment taxes are examples of (employee/employer) __________ taxes.

employer

A known obligation of an uncertain amount that can be reasonably estimated is called a(n) __________ liability.

estimated

A known obligation of an uncertain amount that can be reasonably estimated is called a(n) ___________ liability.

estimated

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.

estimated

Keys Co. is located in Florida. An evacuation has been ordered due to Hurricane Edward, which is headed in the direction of Keys. Keys should record a contingent liability prior to the evacuation.

false

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

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) ______ account.

liability

Unearned subscription revenues that extends over multiple periods is an example of a _______ known liability.

multi-period

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

number of employee withholding allowances employee's income

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

number of employee withholding allowances employee's income

A potential legal claim is recorded Multiple choice question. only if the claim cannot be reasonably estimated but is reasonably possible. only if payment for damages is probable and the amount can be reasonably estimated. only if payment for damages is reasonably possible and the amount is reasonable. only if the claim can be reasonably estimated.

only if payment for damages is probable and the amount can be reasonably estimated.

A potential legal claim is recorded Multiple choice question. only if the claim cannot be reasonably estimated but is reasonably possible. only if payment for damages is reasonably possible and the amount is reasonable. only if payment for damages is probable and the amount can be reasonably estimated. only if the claim can be reasonably estimated.

only if payment for damages is probable and the amount can be reasonably estimated.

Which of the following represent reasonably possible contingent liabilities? Select all that apply. Multiple select question. warranties potential legal claims accounts payable debt guarantees

potential legal claims debt guarantees

In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be (probable/reasonably possible/remote) and reasonably estimable.

probable

A contingent liability can be ignored (not recorded in the financial statements or notes to the financial statements) if it is considered as (probable/reasonably possible/remote) _______________ possibility.

remote

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

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

The ratio of income before interest expense (and any income taxes) divided by interest expense reflects the risk of a company not being able to pay fixed expenses if sales decline is called the ____________ ratio.

times interest earned

Paid absences offered to employees are called ________ benefits.

vacation

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except:

warranties

A ______________ is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

warranty

Form 941, which employers use to report FICA and income tax information to the IRS is due:

within one month after the end of each calendar quarter.

Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks that the employees work. The year-end adjusting entry is recorded as a credit to the ________ account.

Vacation Benefits Payable

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

Sales tax payable

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. The liability is possible and cannot be reasonably estimated. The liability is probable and estimated to be $40,000. The liability is possible and is estimated to be $35,000. The liability is remote and estimated to be $15,000. The liability is probable and cannot be reasonably estimated.

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

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?

Unemployment