ACCY 1 LS: Chapter 8. Current Liabilities

By law, an employer is required to pay which of the following amounts as payroll taxes.

Medicare contributions federal unemployment tax social security contributions

the following are employer payroll costs

federal and state unemployment taxes employer portion of medicare tax

if a liability is classified as current, rather than non-current, the company's working capital will

decrease

The following are not required payrll withholdings

state unemployment tax charitable contributions federal unemployment tax

Liquidity

refers to a company's cash position and overall ability to obtain cash in the normal course of business

Abbott Corp.'s attorney estimates that the company will ultimately have to pay between $350,000 and $500,000 relating to current litigation, and that the most likely amount of the loss will be equal to $400,000. Abbott Corporation should accrue a contingent liability and loss of

$400,000

Under US GAAP, a contingent liability should

> be reported on the balance sheet if the loss will probably occur and can be reasonably estimated >be in the notes to the financial statements if the loss may possibly occur and can be reasonably estimated >not be reported if the loss is remote and unable to be estimated

the following are current liabilities

Deferred revenues accounts payable taxes payable notes payable due in 3 months wages payable

which of the following are essential characteristics of a liability

a future sacrifice of an economic benefit is probable the obligation results from a past event the future sacrifices arises from a resent obligation

Which of the following represent the correct accounting treatment for loss contingencies that do not meet the criteria for accrual but are at least reasonably possible?

an estimate of the potential loss should be made(if possible) and disclosed. a disclosure mut describe the contingency

an interest rate, unless otherwise specified, is typically a(n)

annual rate

The journal entry to record employer payroll taxes affects

liabilities and stockholders equity

deferred revenue should be classified as a _______ on the balance sheet.

liability

on september 1,2018, Kale Corporation signed a 6-month, 12% interest-bearing promissory note for 100,000. the journal entry required march 1, 2019 at the maturity date which of the following entries?

> debit interest payable $4,000 > debit interest expense $2,000 > credit cash $106,000

on sep 1, abc company borrowed 50,000 on a 6%, 9-month note payable to xyz national bank. the entry abc would record at maturity, assuming all year-end( dec 31) adjusting entries were made correctly, would include a _____

debit to noted payable of 50,000 debit to interest payable of 1,000 credit to cash of 52,250 debit to interest of 1,250