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Exam 9: Accounting for Current Liabilities

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Question 31

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Banks authorized to accept deposits of amounts payable to the federal government, including amounts due for payroll taxes are _________________________________.

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verified

federal de...

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Question 32

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The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

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B) False

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Question 33

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All expected future payments are liabilities.

Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

A single liability cannot be divided between current and noncurrent liabilities.

Uncertainties from the development of new competing products are not contingent liabilities.

In order to be reported, liabilities must:

Employers must pay FICA taxes twice the amount of the FICA taxes withheld from their employees.

A _____________________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

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

A company sells sofas with a 6-month warranty. In January, the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs amounted to $85,000 costs from the upholstery materials inventory. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

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.

Amounts received in advance from customers for future products or services:

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note?

The more _______________________ allowances an employee claims, the less federal income tax the employer will deduct from pay.

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA-Medicare is 1.45%.

The total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes is called ___________________.

During June, Vixen Fur 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:

Gross pay is:

A note payable can be used to extend the payment due on an account payable.