Hm 335 exam 2
C
A bank service charge would be included on the bank reconciliation as a(n): A) subtraction from the balance per bank B) addition to the balance per books C) subtraction from the balance per books D) addition to the balance per bank
units-of-production method
A depreciation method that is based on usage and not on time. An example of units of production is the numbers of shoes a machine could produce in its expected useful life
Form W-2
A form completed by the employer at the end of the calendar year to provide a summary of gross earnings and deductions to each employee. At least 3 copies of to the employee, one copy to the IRS, one copy to any state where employee income taxes have been withheld, one copy to the social security administration, and one copy into the records of the business
Form W-3
A form completed by the employer to verify the number of W-2s and amounts withheld as shown on them. This form is sent to the Social security administration data processing center along with copies of each employee's W-2 forms
Form W-4 (employee's withholding allowance certificate)
A form filled out by employees and usually employers to supply needed info about the number of allowances claimed, marital status, and so forth. Used for payroll purposes to determine FIT withholding from and employee's paycheck
check
A form used to indicate a specific amount of money that is to be paid by the bank to a named party or person
fair labor standards act (federal wage and hour law)
A law the majority of employers must follow that contains rules stating the minimum hourly rate of pay and maximum # of work hours a worker will work before being paid time and a half for overtimes
Employer identification number (EIN)
A number assigned by the IRS that is used by an employer when recording and paying payroll and income taxes
Look-back period
A period of time used to determine whether a business should make its Form 941 tax deposits on a monthly or semiweekly basis. The IRS defines this period as July 1 through June 30 of the year prior to the year in which Form 941 tax deposits will be made
petty cash voucher
A petty cash form to be completed when money is taken out of petty cash
A
A restrictive endorsement on a check: A) is the safest endorsement for businesses B) can be further endorsed by someone else C) permits the bank to use its best judgment D) must be endorsed by the company president
auxiliary petty cash fund
A supplementary record for summarizing petty cash information
Federal unemployment tax act (FUTA)
A tax paid by employers to the federal government. The current rate is .6% on the first $7,000 of earnings of each employee after the normal tax credit is applied
State unemployment tax act (SUTA)
A tax usually paid only by employers to the state for employee unemployment insurance
interstate commerce
A test that is applied to determine whether an employer must follow the rules of the Fair Labor Standards Act. If an employer communicates or does business with another business in some other state, it is usually considered to be involved in this
federal income tax (FIT)
Amount of federal income tax withheld by the employer from the employee's gross pay; the amount withheld is determined by the employee's gross pay, the pay period, the number of allowances claimed by the employee on the W-4 form, and the marital status
depletion
Amount of natural resources that has been exhausted by mining, pumping, and so forth for a period of time
state income tax (SIT)
Amount of state income tax withheld by the employer from the employee's gross pay
double declining-balance method
An accelerated depreciation method that uses twice the straight-line rate multiplied by the book value of asset to calculate depreciation expense. Residual value is not subtracted from the cost of an asset in this calculation
land improvements
An asset account that records improvements made to land; such as improvements made to land; such improvements have a limited life and are subject to depreciation (ex driveway or fences)
Form 941 taxes
Another term used to describe FIT, OASDI, and Medicare
Intangible assets
Assets having no physical substance (such as patents or franchises)
drawee
Bank that drawer has an account with
allowances (exemptions)
Certain dollar amounts of a person's income tax that will be considered nontaxable for income tax withholding purposes
C
Company policy for internal control should include all of the following except: A) the owner (or responsible employee) signs all checks after receiving authorization to pay from the departments concerned B) at time of payment, all supporting invoices or documents will be stamped "paid" C) monthly bank statements should be sent to and reconciled by the same employees who authorize payments and write checks D) employees will be rotated twice a year
book value
Cost of asset less accumulated depreciation
petty cash fund
Fund that allows payment of small amounts without the writing of checks
B
Greeting online disposed of a van that cost $22,000 with accumulated depreciation of $15,000. The journal entry would be to: A) debit accumulated depreciation $15,000; credit van $15,000 B) debit loss disposal of plant asset $7,000; debit accumulated depreciation $15,000; credit van $22,000 C) debit accumulated depreciation $15,000; debit depreciation expense $7,000; credit van $22,000 D) none of these answers are correct
A
If the employee has $500 withheld from their check for FICA-OASDI, what is the amount that the employer would need to pay? A) $500 B) $400 C) $100 D) $0
cash short and over
If the ending balance is a debit, it is recorded on the income statement as a misc. expense (shortage) ; if it is a credit, it is recorded as a misc. income (overage)
workers' compensation insurance
Insurance purchased by most employers to protect their employees against losses due to injury or death while on the job
D
Internal control over a company's assets should include the following procedures: A) all cash receipts will be deposited into the bank the same day they arrive B) all cash payments will be made by check (except petty cash) C) responsibilities and duties of employees will be divided D) all of these answers are correct
straight-line method
Method that allocates an equal amount of depreciation over an asset's period of usefulness
capital expenditures
Original cost of an asset as well as additions or enlargements, extraordinary repairs, and betterments
FICA (federal insurance contributions act)
Part of the social security act of 1935, this law taxes both the employer and employee up to a certain maximum rate and wage base of OASDI tax purposes. It also taxes both the employer and employee for Medicare purposes, but this tax has no wage base maximum
revenue expenditures
Payments made for ordinary maintenance of an asset or unnecessary or unreasonable situations
drawer
Person who writes a check
B
The amount of federal income tax withheld from an employee during the year is determined by the employee's: A) W-2 form B) W-4 form C) 1040 form D) all of these answers are correct
residual (salvage) value
The amount of the asset's cost that will be recovered when the asset is sold, traded in, or scrapped
C
The check is written and signed by the: A) bank teller B) drawee C) drawer D) none of the above
D
The correct journal entry to record the payment of FUTA is to: A) debit FUTA expense; credit cash B) debit cash; credit FUTA expense C) debit cash; credit FUTA payable D) debit FUTA payable; credit cash
D
The employer's annual federal unemployment tax return is: A) Form W-4 B) form 941 C) form 8109 D)form 940
D
The entry to establish the petty cash fund debited misc. expense. This would cause: A) revenues to be understated B) expenses to be understated C) revenues to be overstated D) expenses to be overstated
B
The entry to record the payment of taxes withheld from employees and FICA taxes would be to: A) credit cash; credit FICA-social security payable, FICA-medicare payable, and federal income tax payable B) credit cash; debit FICA-social security payable, FICA-medicare payable, and federal income tax payable C) debit cash; credit FICA-social security payable, FICA-medicare payable, and federal income tax payable D) none of these answers are correct
Form SS-4
The form filled out by an employer to get an EIN. The form is sent to the IRS, which assigns the number to the business
D
The law that governs overtime earnings is called: A) state wage control act B) federal wage and hour law C) fair labor standards act D) both B and C are correct
A
The number of allowances claimed by an employee determines how much will be withheld from their paycheck for: A) federal income tax B) FICA-OASDI C) FICA-medicare D) both A and B are correct
payee
The person or company to whom the check is payable
C
The process of writing off an intangible asset is: A) depletion B) depreciation C) amortization D) none of these answers are correct
B
The wages and salaries expense account would be used to record: A) a debit for the amount of net pay owed to the office workers B) gross earnings for the office workers C) net earnings for the office workers D) a credit to the amount owed to the office workers
A
There are two parts of FICA: A) OASDI and medicare B) old age benefits and workers' compensation C) retirement and income tax withholdings D) defined pension and medicare
amortize
To charge a portion of an expenditure over a fixed number of years. Those assets with indefinite lives are not subject to this
A
To examine in detail the weekly payroll of all employees, one would look at the: A) payroll register B) employee earnings record C) W-2 D) W-4
D
Vanessa's gymnastics' cash register tapes do not agree with cash receipts. The facts are: total cash register tapes $400; total coins and currency $404. The summary journal entry to record the day's transactions would include a: A) $400 debit to cash; $404 debit to cash short and over; and $404 credit to service revenue B) $404 debit to cash and $404 credit to service revenue C) $400 debit to cash and $400 credit to service revenue D) $404 debit to cash; $404 credit to cash short and over; and $404 credit to service revenue
D
Wages and Salaries Payable would be used to record: A) gross earnings of the employees B) the paid portion of the earnings C) cumulative earnings of the employee D) net earnings of the employees not paid
D
When a business starts, what must it obtain that identifies itself to the government? A) a look-back period B) federal unemployment number C) state employment number D) employer identification number
blank
Which endorsement type could be further endorsed?
restrictive
Which endorsement type restricts any further endorsement?
full
Which endorsement type restricts further endorsement to only the person or company named?
C
Which form contains information about gross earnings and is given to the employee by January 31? A) form W-3 B) form SS-4 C) form W-2 D) form W-4B
C
Which of the following accounts would most likely be debited in the replenishment of petty cash? A) cash B) withdrawals C) postage expense D) petty cash
A
Which of the following is a non-depreciable asset? A) land B) building C) desk chairs D) computer
D
Which of the following is an example of a land improvement? A) driveway B) shrubbery C) fences D) all of these answers are correct
D
Which of the following transactions would most likely NOT be recorded in an auxiliary petty cash record? A) purchase of first aid supplies B) purchase of postage stamps C) payment of gas for the company vehicle D) payment on a $400 rent bill
A
Which taxes are considered 941 taxes? A) FICA and FIT B) FICA, FUTA, and SUTA C) FICA and SIT D) None of these answers are correct
D
Workers' compensation insurance is: A) paid by the employee to protect himself/herself against job-related accidents or death B) paid by the employee to protect himself/herself against non job-related accidents and death C) paid by the employer to protect the employee against non job-related accidents or death D) paid by the employer to protect the employee against job-related accidents or death
internal control system
procedures and methods to control a firm's assets as well as monitor its operations