QUIZ 9

•             Question 1

5 out of 5 points

               

                Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:                                      

                Selected Answer:             Long-term liabilities.

                                               

•             Question 2

5 out of 5 points

               

                 A company sold $12,000 worth of bicycles with an extended warranty. The company’s experience is that warranty expense averages 2% of sales. The current period’s entry to record the warranty expense is:                                     

                Selected Answer:             Debit Warranty Expense $240; credit Estimated Warranty Liability $240.

                                               

•             Question 3

5 out of 5 points

               

                During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:                                

                Selected Answer:             Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.

                                               

•             Question 4

5 out of 5 points

               

                Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee’s pay. The amount of federal income tax withheld from her earnings was $1,325.17. What is the total amount of taxes withheld from the Portia’s earnings? (Round your intermediate calculations to two decimal places.)                               

                Selected Answer:             $1,957.06

                                               

•             Question 5

5 out of 5 points

               

                Debt guarantees are:                                     

                Selected Answer:             Considered to be contingent liabilities.

                                               

•             Question 6

5 out of 5 points

               

                Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.                                               

                Selected Answer:             True

                                               

•             Question 7

5 out of 5 points

               

                The correct times interest earned computation is:                                            

                Selected Answer:             (Net income + Interest expense + Income taxes)/Interest expense.

                                               

•             Question 8

0 out of 5 points

               

                During the first week of January, an employee works 46 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $16 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $80 in federal income taxes withheld. What is the amount of this employee’s net pay for the first week of January?                                    

                Selected Answer:             $923.98

                                               

•             Question 9

5 out of 5 points

               

                The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.                                           

                Selected Answer:             True

                                               

•             Question 10

5 out of 5 points

               

                Uncertainties such as natural disasters are:                                         

                Selected Answer:             Not contingent liabilities because they are future events not arising from past transactions or events.

                                               

•             Question 11

5 out of 5 points

               

                Triston Vale is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer’s payroll taxes expenses for this employee?                                   

                Selected Answer:             $711.17

                                               

•             Question 12

5 out of 5 points

               

                A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.                                  

                Selected Answer:             True

                                               

•             Question 13

0 out of 5 points

               

                During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to record the estimated warranty provision at the end of the month is:                                            

                Selected Answer:             Debit Estimated Warranty Liability $14,000; credit Warranty Expense $14,000.

                                               

•             Question 14

5 out of 5 points

               

                A high merit rating for state unemployment taxes means that an employer has high employee turnover or seasonal hiring.                                

                Selected Answer:             False

                                               

•             Question 15

5 out of 5 points

               

                The full disclosure principle requires the reporting of contingent liabilities that are reasonably possible.                                  

                Selected Answer:             True

                                               

•             Question 16

5 out of 5 points

               

                An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay.                                              

                Selected Answer:             True

                                               

•             Question 17

5 out of 5 points

               

                The deferred income tax liability:                                             

                Selected Answer:             Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.

                                               

•             Question 18

5 out of 5 points

               

                The Federal Insurance Contributions Act (FICA) requires that each employer file a:                                            

                Selected Answer:             Form 941.

                                               

•             Question 19

5 out of 5 points

               

                If a company uses a special payroll bank account:                                             

                Selected Answer:             The company draws one check for the entire payroll on the regular bank account and deposits it in the payroll bank account.

                                               

•             Question 20

5 out of 5 points

               

                A contingent liability is:                                 

                Selected Answer:             A potential obligation that depends on a future event arising from a past transaction or event.