COB 241: Ch 9
Simms Accountants charged a client $2,000 cash plus tax for services provided in a state where the service sales tax rate is 6%. As a result of this event, Simms would recognize
$120 liability on the Balance sheet $2,000 of Service Revenue a $2,120 increase in total assets
Mr. Wallace earns a monthly salary of 6k. Mr W's withholding for income taxes is 650 per month. His monthly voluntary withholdings include 250 for medical insurance and 20 per month for the Red Cross. Assume a Social Security tax rate of 6%, a Medicare tax rate of 1.5% and an Unemployment tax rate of 6% on the first 7k of income. Based on this information, net pay for 1/1, Y1 is
$4,630 gross pay - deductions 6,000 - 650 - 250 - 20 - 360 - 90 = 4630
Jack Company issued a 12K note payable on 9/1, Y1, for a one year term. Interest was set at 5% per year. In Y2, Jack would recognize interest expense amounting to
$400 12,000 principal x 5% = $600 per year; $600 / 12 months = $50 per month; $50 per month x 8 months = $400 accrued interest
Jack Company issued a 12K note payable on 9/1, Y1, for a one year term. Interest was set at 5% per year. In Y2, Jack would recognize cash flow from operating activities amounting to
$600 of interest expense (12,000 x 5% = 600 per year). Although interest expense is recognized in Y1, all interest is actually paid in Y2
The journal entry to recognize accrued interest expense includes a ... to the expense account and a ... to the interest payable account
debit credit
The journal entry to recognize the issuance of a note payable includes a ... to the cash account and a ... to the notes payable account
debit credit
the journal entry to recognize a warranty obligation includes a ... to the Warranty expense account and a ... to the warranty payable account
debit credit
The journal entry to recognize accrued vacation pay includes a
debit to an expense account credit to a liability account
The journal entry to recognize a sales event that included sales tax would require a ... to the cash account, a ... to the sales tax payable account, and a ... to the sales revenue account
debit to cash credit to sales tax payable credit to sales revenue
The journal entry to recognize repaying the principal of a note payable includes a
debit to notes payable credit to cash
Janie Jones earns a monthly salary of $6,000. Janie's total withholdings amount to 1200. Based on this info, the journal entry to record the payment of salary expense for Janie would include
debit to salary expense
When a company pays a contingent liability for warranties, the balance in the Cash account ... and the balance in the Warranties Payable account ...
decreases decreases
Employers determine each employee's net pay by ... the withholdings to/from the gross earning
deducting
Gross ... is the sum of regular pay plus any bonuses, overtime, or other additions
earnings
Which of the following statements is TRUE
employers are required to withhold income taxes from employee earnings. The employers then pay the withheld taxes directly to the gov.
Recognizing a cash revenue event that is subject to state sales tax will cause a ... in the Cash account; a ... in the Sales Tax Payable account; and a ... in the Revenue account
increase increase increase
On 8/1, Y1, Star Company borrowed money from Moon Company. Due to the 12/31, Y1, adjustment to recognize accrued interest on Star's books, the balance in the Interest Expense acc ... and the balance in the Interest Payable acc ...
increases increases
When a company recognizes a contingent liability for warranties the balance in the Warranty Expense account ... and the balance in the Warranties Payable account ...
increases increases
When a business pays an individual for specific services, but the individual supervises and controls the work, then that individual is considered to be
independent contractor
Which of the following statements is TRUE
investment risk cannot be determined only by looking at the debt to assets ratio
In a note containing the terms of a lending transaction, the borrower is called the ... and the lender is called the ...
issuer payee
If the likelihood of a future obligation arising is probable and its amount can be reasonably estimated:
liability must be reported on Balance sheet estimated amount is shown as an expense on the Income statement
In a note containing the terms of a lending transaction, the party borrowing the money may be called the
maker of the note borrower issuer of the note
The average time it takes a business to convert cash to inventory, inventory to accounts receivable, and accounts receivable back to cash is commonly called the ... cycle
operating
Which of the following forms is used to document the number of withholding allowances claimed by an employee
Form W-4
A warranty is
a contingent liability reported in financial statements
Bill Seymour earns a monthly salary of $10K. Bill's total withholdings amount to 2K. Based on this info, the journal entry to record the payment of salary expense for Bill would include
a debit to Salary Expense for 10k, a credit to various liability accounts for 2k, and a credit to Cash for 8k
Mr. Wallace earns a monthly salary of 6k. Mr W's withholding for income taxes is 650 per month. His monthly voluntary withholdings include 250 for medical insurance and 20 per month for the Red Cross. Assume a Social Security tax rate of 6%, a Medicare tax rate of 1.5% and an Unemployment tax rate of 6% on the first 7k of income. Based on this information, the amount of payroll tax that Mr W's employer would pay on 1/31, Y1 is
$810 The employer must match the amount of the employee's Social Security and Medicare tax plus pay Unemployment tax. The employee's income tax and voluntary withholdings do not affect the emplyer's payroll tax expense. In this case, the payroll tax expense is $810 (360 Social Security Tax + 90 Medicare tax + 360 unemployment tax)
Miss billings earns a monthly salary of 8k. Miss billings' withholding for income taxes is 900 per month. her monthly voluntary withholdings include 380 for medical insurance and 30 per month for the Humane Society. Assuming a social security tax rate of 6%, a medicare tax rate of 1.5 %, and an unemployment tax rate of 6% on the first 7k of income. based on this info, the amount of payroll tax that Miss B's employer would pay on 1/1, Y1 is
480 + 120 + 420 = 1020
Miss billings earns a monthly salary of 8k. Miss billings' withholding for income taxes is 900 per month. her monthly voluntary withholdings include 380 for medical insurance and 30 per month for the Humane Society. Assuming a social security tax rate of 6%, a medicare tax rate of 1.5 %, and an unemployment tax rate of 6% on the first 7k of income. based on this info, net pay for 1/1, Y1 is
8,000 - 900- 380 - 30 - 480 - 120 = 6090
Assume three companies in the same industry have the following current ratios: Adams Co = 1.33 to 1 Baker Co = 1.15 to 1 Charles Co = 1.27 to 1 Based on this, which company appears to have the LOWEST liquidity
Baker
Paying off the principal balance of a note payable affects which of the following financial statements
Balance sheet Statement of cash flows
Which of the following is responsible for paying unemployment tax
Employers only
Bill Seymour earns a monthly salary of $10K. Bill's total withholdings amount to 2K. Based on this info, the recognition of the payment of salary expense will affect which of the financial statements
Income statement Statement of cash flows balance sheet
A company experienced an event that caused total assets and liabilities to decrease and caused a cash outflow to appear on the statement of cash flows. Which of the following events could have caused these effects
Paying off an accrued interest payable Paying off the principal balance of a loan
Which of the following taxes provides funding for pensions
Social security taxes
Which of the following collects unemployment tax
State gov Federal gov
Recognizing accrued interest expense would affect which of the following financial statements
Statement of changes in stockholders' equity Income statement Balance sheet
Recognizing a cash revenue event that is subject to state sales tax would
affect the statement of changes in stockholder's equity affect the Income statement
Issuing a note to borrow money is a
asset source transaction
The Warranties Payable account appears on which of he following financial statements
balance sheet
recognizing accrued interest expense would affect which of the following financial statements
balance sheet statement of changes in stockholder's equity income statement
The recognition of accrued payroll tax expense will affect which of the following financial statements
balance sheet statement of changes in stockholders' equity income statement
Jack company issued a $12,000 note payable on 9/1, Y1, for a one year term. Interest was set at 5% per year. In Y2, Jack would recognize
cash outflow from financing activities of 12K $400 of interest expense a cash outflow from operating activities of $600
Janie Jones earns a monthly salary of $6K. Janie's total withholdings amount to 1200. Based on this info, the recognition of the payment of salary expense will cause the amount of
cash outflows from operating activities shown on the statement of cash flows to increase net income shown on the income statement to decrease
Gamma Company borrowed $5,000 on 10/1, Y1. Interest was set at 6% per year. Recognizing accrued interest on 12/31, Y1 will
cause expenses and liabilities to increase by $75.
Which of the following represents a voluntary employee withholding
charity withholdings
Recognizing accrued interest expense is a
claims exchange transaction
The journal entry to record paying the employee with a $2k monthly salary and a $300 federal income tax deduction would include a
credit to a liability account
Janie Jones earns a monthly salary of $6K. Assume a Social Security tax rate of 6% Medicare tax rate of 1.5% and an Unemployment tax rate of 6% ont eh first $7K of earned income. The journal entry on 1/31, Y1 to record accrued payroll tax expense would include a
credit to various liabilities for $810
The current ratio is calculated by dividing ... ... by ... ...
current assets / current liabilities
Issuing a note to borrow money will affect which of the following financial statements
statement of cash flows balance sheet
t/f: fringe benefits are reported as expenses on the employers financial statements
true
What distinguishes contingent liabilities from general uncertainties
whether the event stems from a past event
