ACCT 101 Chapter 10 Review

Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee.

• True

• False

Which of the following principles says that warranty expense must be claimed in that pay period?

• Matching Principle

• Revenue Recognition Principle

• Full Disclosure Principle

• Conservatism Principle

Which of the following are NOT required to be deducted from employees' paychecks?

• State Income Tax

• Federal Income Tax

• Charitable Contributions

• FICA Tax

Estimated warranty payable would be included in the liability section of the balance sheet.

• True

• False

Which of the following is TRUE of a contingent liability?

• It is an actual liability that is difficult to estimate.

• It is a potential liability that depends on a future event.

• It is an actual liability that depends on a past event.

• It is a liability resulting from a lawsuit settled in court.

Which of the following is a major control risk in the payroll area?

• Fictitious persons cashing paychecks

• Expenses being recorded as assets in order to change earnings

• Contracts being awarded to relatives of employees

• Theft of inventory by staff

Which of the following is a control procedure to prevent fictitious persons cashing checks?

• Keeping computerized records of payroll data

• Requiring photo IDs for employees picking up their paychecks

• Serial numbering of paychecks

• Having employees clock in and out of work

Which of the following is paid by the employee ONLY?

• State Unemployment Tax (SUTA)

• FICA

• Employee Income Tax

• Federal Unemployment Tax (FUTA)

The entry to estimate warranty payable includes a credit to Warranty expense.

• True

• False

Which of the following is included in the entry to record estimated warranty payable?

• A debit to Estimated Warranty Payable

• A credit to Warranty Expense

• A credit to Inventory

• A credit to Estimated Warranty Payable