Financial and Managerial Accounting Chapter 6

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

Benefits

On March 1, Young Co. borrowed $1,000 by extending their past-due account payable with a 120-day, 6% interest-bearing note. On June 29, the due date, Young pays the amount due in full. This entry would be recorded by Young with a credit to _____ in the amount of ______. Multiple choice question. Cash; $1,060 Notes Payable; $1,020 Cash; $1,000 Notes Payable; $1,060 Notes Payable $1,000 Cash; $1,020

Cash; $1,020

Fill in the blank question. 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

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. Multiple choice question. Customer Satisfaction Estimated Warranty Liability Miscellaneous Repairs Expense

Estimated Warranty Liability

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. True false question.TrueFalse

False

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account? Multiple choice question. Accounts Receivable Cash Notes Receivable Accounts Payable Notes Payable

Notes Payable

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

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 __________. Multiple choice question. short-term account payable long-term note receivable long-term note payable short-term note payable long-term account payable short-term note receivable

Sales tax payable

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

Unearned Subscription Revenue Notes Payable

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? Multiple choice question. Federal taxes Unemployment Insurance premiums State taxes FICA

Unemployment

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? Multiple choice question. Unemployment State taxes Federal taxes Insurance premiums FICA

Unemployment

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. Multiple choice question. Vacation Benefits Payable Employee Wages Payable Employee Taxes Payable

Vacation Benefits Payable

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: Multiple choice question. warranty plan vacation plan bonus plan benefit plan

bonus plan

Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing 5% annual interest. Niwa's entry to record this transaction would include which of the following entries? (Check all that apply.) Multiple select question. Credit to Accounts Payable Debit to Notes Payable Credit to Notes Payable Credit to Cash Debit to Accounts Payable Debit to Cash

credit notes payable debit to cash

Multiple Choice Question Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid. Multiple choice question. current liability long-term liability long-term asset current asset

current liability

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

employee's income number of employee withholding allowances

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

employer

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated. Multiple choice question. multi-period estimated uncertain unreal

estimated

A measurable obligation arising from agreements, contracts, or laws is called a liability.

known

Unearned subscription revenues that extends over multiple periods is an example of a _______ known liability. Multiple choice question. long-term multi-period current-period

multi-period

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

potential legal claims debt guarantees

Fill in the blank question. 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

Paid absences offered to employees are called _______ benefits.

vacation

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

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. Credit to Cash Debit to Paving Fees Earned Debit to Unearned Paving Fees Credit to Paving Fees Earned Debit to Cash Credit to Unearned Paving Fees

Debit to Cash Credit to Unearned Paving Fees

A measurable obligation arising from agreements, contracts, or laws is called a liability.

Known 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. Multiple choice question. liability revenue asset expense

Liability

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. Multiple choice question. short-term note payable prepaid expense account payable long-term note payable

Short Term Note Payable

Which of the following situations would require a journal entry to record the contingent liability in the financial statements? Multiple choice question. The liability is remote and estimated to be $30,000. The liability is possible, but cannot be reasonably estimated. The liability is possible and estimated to be $25,000 The liability is probable, but the amount cannot be reasonably estimated. The liability is probable and estimated to be $10,000.

The liability is probable and estimated to be $10,000.

On June 1, Sawyer Co. borrowed $5,000 by extending their past-due account payable with a 45-day, 12% interest-bearing note. On July 16, the due date, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) _______ to Interest Expense in the amount of _______. Multiple choice question. debit; $600 credit; $75 debit; $75 credit; $600

debit; $75

Which of the following situations is not a contingent liability? Multiple choice question. Future natural disaster Debt guarantee of owner Probable legal claim against a company Possible legal claim against a company

Future natural disaster

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except: Multiple choice question. unearned revenues. notes payable. accounts payable. payroll obligations. warranties.

warranties.

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid. Multiple choice question. long-term liability long-term asset current liability current asset

Medical insurance Pension plans

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. revenue dividend liability expense

Liability

A measurable obligation arising from agreements, contracts, or laws is called a ______ liability.

known