MODULE 9
REVIEW
1.
Vacation benefits are a form of estimated liabilities for an employer.
A) True
B) False
2.
An employee earned $47,000 during the year working for an employer. The FICA
tax for social security is 6.2% and the FICA tax for Medicare is 1.45%. The
employee's share of FICA taxes is:
A) $3,595.50
B) Zero, since the employee's pay exceeds the FICA limit
C) $681.50
D) $2,914.00
E) $7,191.00
3.
Which of the following is a true statement?
A) IFRS treats accounts payable, sales taxes payable and unearned revenues
as estimated liabilities while GAAP treats them as contingent liabilities.
B) None of the statements above are true statement.
C) GAAP treats accounts payable, sales taxes payable and unearned revenues
as estimated liabilities while IFRS treats them as contingent liabilities.
D) GAAP and IFRS treat accounts payable, sales taxes payable and unearned
revenues in a similar manner as estimated liabilities.
E) GAAP and IFRS treat accounts payable,
sales taxes payable and unearned revenues in a similar manner as
determinable liabilities.
4.
On December 1, Martin Company signed a $5,000 3-month 6% note payable, with
the principle plus interest due on March 1 of the following year. What
amount of interest expense is accrued at December 31 on the note?
A) $300
B) $50
C) $25
D) $75
E) $0
5.
A company can have a liability even if the amount of the obligation is
unknown.
A) True
B) False
6.
A payroll register is a cumulative record of an employee's hours worked,
gross earnings, deductions and net pay.
A) True
B) False
7.
A short-term note payable:
A) Is a written promise to pay a specified
amount on a definite future date within one year or the company's operating
cycle, whichever is longer
B) Is not a liability until the due date
C) Is a contingent liability
D) Is an estimated liability
E) Cannot be used to extend the payment period for an account payable
8.
The employer should record payroll deductions as:
A) Payroll taxes
B) Employee receivables
C) Current liabilities
D) Employee payables
E) Wages payable
9.
Known liabilities are obligations set by agreements, contracts or laws and
are measurable and definitely determinable.
A) True
B) False
10.
If a company had net income of $2,379,600, interest expense of 234,000, a
tax rate of 40%, and operating income of 4,200,000, what would the times
interest earned ratio be for the company?
A) 7.18
B) 4.07
C) 10.17
D) 7.78
E) 17.95
11.
Most employees and employers are required to pay:
A) Local payroll taxes
B) Both B and C only
C) Local, state and federal payroll taxes
D) Federal payroll taxes
E) State payroll taxes
12.
A table that shows the amount of federal income tax to be withheld from an
employee's pay is the:
A) Form 941
B) W-2
C) Tax table
D) Wage bracket withholding table
E) W-4
13.
A special bank account used solely for the purpose of paying employees, is
created by depositing the amount of each employees' net pay into the account
every pay period. This account is referred to as a(n):
A) Employee's Individual Earnings account
B) Federal depository bank account
C) Employees' bank account
D) Payroll register account
E) Payroll bank account
14.
Amounts received in advance from customers for future products or services:
A) Are revenues
B) Require an outlay of cash in the future
C) Are liabilities
D) Are not allowed under GAAP
E) Increase income
15.
Gross pay is:
A) Deductions withheld by an employer
B) The amount of the paycheck
C) Take-home pay
D) Total compensation earned by an employee
before any deductions
E) Salaries after taxes are deducted
16.
A short-term note payable is a written promise to pay a specified amount on
a definite future date within one year or the operating cycle, whichever is
longer.
A) True
B) False
17.
The deferred income tax liability:
A) Is recorded whether or not the difference between taxable income and
financial accounting income is permanent or temporary
B) Is never recorded
C) Is a contingent liability
D) Represents income tax payments that are
deferred until future years because of temporary differences between GAAP
rules and tax accounting rules
E) Can result in a deferred income tax asset
18.
Mission Company has three employees:
