Chap 8 - Acc 2

Choose the correct formula for calculating interest? Face amount x annual interest rate x fraction of the year Face amount x rate per interest period Present value x rate per interest period

Face amount x annual interest rate x fraction of the year

Amounts that are subtracted from an employee's gross pay are referred to as_____? payroll withholdings. payroll taxes. employee costs. net pay.

payroll withholdings

Which of these payroll taxes are paid only by the employer? Check all that apply. a. Social security b. SUTA c. FUTA d. medicare

A&D

FICA tax is paid by __________? the employer only. both the employee and employer. the employee only.

BOTH

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 receivable $5,000. credit notes payable $5,000. credit notes expense $5,000.

credit notes payable 5,000

TRUE OR FALSE? By law, an employer is required to pay these ? Medicare contributions Federal unemployment tax Social Security contributions

TRUE

Whats paid by employer & the employee? (2 answers). a. medicare b. FUTA c. social security d. SUTA

A&C

Rimland Corporation has employee salary expense of $10,000 on April 30, 2018. FICA contributions are 7.65%, and FUTA contributions are 6.2%. The journal entry for payroll tax expense will include which of the following? Debit payroll tax expense $1,385 Credit cash $10,000

Debit payroll tax expense $1,385

The journal entry to record employer payroll taxes affects ______. liabilities only assets only liabilities and stockholders equity.

liabilities and stockholders equity.

Which of the following are included in FICA taxes? (2 answers). A 6.2% FUTA tax B 6.2% social security tax C 1.45% Medicare tax D 5.4% SUTA tax

B&C

Which payroll tax is paid equally by the employee and the employer? SUTA FICA Federal income tax FUTA

FICA

True or False: Your employer is allowed to keep the amounts withheld from your gross pay.

False, Your employer is required to send payroll deductions to the appropriate government agency or company.

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) __________? accounts receivable. notes payable. notes receivable. accounts payable.

Accounts payable

Your Answer correct Wang Corporation sells $200,000 goods on account to customers. Wang estimates that warranties will be 2% of sales. At the end of the year, Wang will require which of the following entries for warranties? a. Debit warranty expense $4,000; Credit warranty liability $4,000 b. Debit warranty expense $4,000; Credit warranty income $4,000 c. No journal entry is required.

Debit warranty expense $4,000; Credit warranty liability $4,000

Additional benefits such as health insurance, retirement benefits, or life insurance that are paid by the employer are called_____________ benefits. a. Employer b. Employee

Employee

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700, Medicare $1,450, federal income tax $18,000 and state income tax $3,850. The journal entry to record wages paid includes a ______. $70,000 debit to Salaries expense $100,000 debit to Salaries expense $100,000 credit to Cash

$100,000 debit to Salaries expense

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 __________? a. $20,000 x 0.08 x 6 b. $20,000 x 0.08 c. $20,000 x 0.08 x 6/12

$20,000 x 0.08 x 6/12

On June 1, 2018, Oxian Corp. receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Oxian should recognize on the income statement for 2018? a. $12,000 b. $5,000 c. $7,000

$7,000 $24,000/24 months = $1,000 per month x 7 months = $7,000 revenue.

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. A debit to Cash of $300 and a credit to Revenue of $300. b. A debit to Cash of $300 and a credit to Deferred Revenue of $300. c. A debit to Revenue of $300 and a credit to Cash of $300.

A debit to Cash of $300 and a credit to Revenue of $300. The credit is to Deferred revenue because the cash has been collected in advance. Later when ABC Airlines provides the service of flying its customers, it can record a decrease to Deferred revenue (debit) and increase Revenue (credit).

Notes payable is classified as a liability that has which of the following effects? Creates an asset on the balance sheet Creates interest expense on the income statement Creates deferred revenue on the income statement Creates revenue on the income statement

Creates interest expense on the income statement

True or False: If a state has an unemployment tax program, no FUTA tax must be paid.

False

FICA is the acronym for the _________? Federal Income Comprehensive Act. Federal Insurance Contribution Act. Federal Income Company's Act.

Federal Insurance Contribution Act.

Deferred revenue should be classified as a(n) ________ on the balance sheet? a. Asset b. Liability c. Stockholder equity

Liability

Yes or No Are they apart of payroll withholdings? State unemployment tax (SUTA) Charitable contributions Federal unemployment tax (FUTA)

No

__________ payable is a short-term liability that occurs when a company purchases goods and does not immediately pay with cash.?? a. account b. liability c. interest

account

What are the two classifications for liabilities? Investing Operating Current Recurring Long-term

long-term & current

Deductions from employee pay for contributions toward retirement savings plans and contributions for charitable organizations are examples of________________? voluntary employee deductions FICA deductions mandatory employee deductions optional taxes

voluntary employee deductions

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????? (2 Answers). sales revenue of $1,000. sales revenue of $1,100. sales taxes payable of $100.

A&C

Payroll withholdings ______. (Select all that apply.) A. are amounts subtracted from employees' gross earnings to determine their net pay B. are amounts added to employees' gross earnings to determine their net pay C. decrease the amount of cash an employee receives D. increase the amount of cash an employee receives

A&C

Which of the following payroll-related taxes must the employer pay by law? (2 Answers). a. Federal Insurance Contributions Act amounts b. Union dues c. Contributions toward retirement funds d. Unemployment taxes

A&D

When an employer withholds items such as charitable organization contributions from an employee's pay, the employer must record the item as __________? A. other income for the period. B. deferred compensation to the employee. C. a liability until the amount is paid to the organization.

C. a liability until the amount is paid to the organization.

Payroll withholdings are A. the items subtracted from an employee's gross pay to arrive at take-home pay. B. the employer's portion of taxes paid for social security and Medicare. C. 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.

On September 1, ABC Company borrowed $50,000 on a 6%, 9-month note payable to XYZ National Bank. Given no previous adjusting entries have been recorded, ABC's adjusting entry at December 31 would include a ______. debit to Interest expense of $1,000 debit to Interest expense of $750 debit to Interest expense of $3,000 debit to Interest expense of $2,250

1,000

John Smith works 40 hours for ABC Corp. for $15 per hour. Required payroll deductions are: Social Security $37.20, Medicare $8.70, federal Income tax $58, and state income tax $10. What is John's net pay? a. 600 b. 486.10 c. 532

486.10..... Net pay=$600-$37.20-$8.70-$58-$10=$468.10.

Which of the following describes the requirement to pay FUTA. A. Both FUTA and SUTA taxes are optional taxes B. An employer must pay FUTA taxes only if no SUTA taxes are due C. An employer must pay FUTA taxes even if the employer pays SUTA taxes

An employer must pay FUTA taxes even if the employer pays SUTA taxes

whats paid only by the Employer? (2 answers) a. medicare b. FUTA c. social security d. SUTA

B&D

Withholding taxes for federal and state income tax are based upon which items? (Check all that apply). a.Size of the corporation in total assets b.Number of employees at the company c.Amounts earned by employees d.Number of exemptions claimed

C&D

Taxes collected for taxing authorities are recognized as ______________? prepaid expenses. long-term liabilities. current liabilities. revenue.

Current liabilities

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? Debit to Cash $100,000 Credit to Note Payable $106,000 Credit to Note Payable $100,000 Debit to Interest Expense $6,000

Debit to Cash $100,000 Credit to Note Payable $100,000

Which payroll tax is paid equally by the employee and the employer? Federal income tax FICA State income tax

FICA

An end-of-period adjusting entry that debits Deferred Revenue most likely will credit a(n) ______ account. Liability asset revenue

Revenue

Sally Company manufactures large kitchen appliances. For the first year of purchase, the company will repair any manufacturing defect free of charge. Sally apparently sells its appliances with a(n) ____________? a. Warranty b. Sales Allowance c. Promissory note

Warranty

Which of the following is a guarantee that protects a customer from product defects for a specified period of time? Warranty Contingency Sales allowance Promissory note

Warranty

Yes or No Are social security , Medicare taxes, and federal income tax apart of payroll withholdings?

Yes

Deferred revenue is classified as _________? an asset an expense a revenue a liability

a liability, the company has the obligation to provide a good or service.

Liabilities are classified as________? current and long-term. operating and investing. operating and nonoperating. revenues and expenses.

current and long-term

Issuing a note payable for cash results in a(n) ______. a. increase in liabilities and a decrease in stockholders' equity b. increase in assets and an increase in liabilities c. decrease in assets and an increase in liabilities

increase in assets and an increase in liabiltites

The journal entry to record employer payroll taxes affects ______. liabilities and stockholders' equity assets only liabilities and assets

liabilities and stockholders' equity

TRUE OR FALSE? The employers to pay these?? Life insurance premiums Health insurance premiums

FALSE

The employer's portion of FICA tax remitted to the taxing authority is: higher than the employee's portion lower than the employee's portion the same as the employee's portion

the same as the employee's portion