College Accounting - Ch 11

On August​ 31, 2013, Peter Services received​ $3,500 in advance from a customer. Which of the following would be the journal entry to record the receipt of​ cash?

• debit Unearned Revenue​ $3,500 and credit Service Revenue​ $3,500

• debit Cash​ $3,500 and credit Unearned Revenue​ $3,500

• debit Cash​ $3,500 and credit Service Revenue​ $3,500

• debit Unearned Revenue​ $3,500 and credit Cash​ $3,500

Celia's had sales of​ $8,421. The state sales tax rate is​ 8%. Sales are for cash. What amount will be credited to the Sales Revenue​ account?

• ​$674

• ​$7,747

• ​$8,421

• ​$9,095

The old​ age, survivors, and disability insurance portion of FICA taxes is imposed on all of an individual​ employee's earnings.

• True

• False

Gross pay is the total amount of​ salary, wages,​ commissions, and bonuses earned by an employee during a pay​ period, after taxes or any other deductions.

• True

• False

SUTA, State unemployment compensation​ tax, is not withheld from an​ employees' gross earnings.

• True

• False

FICA tax is paid by the employee only and is deducted from gross pay.

• True

• False

The Bergan Corp. has gross pay for March of​ $50,000. The journal entry in the payroll cycle to record salary expense would include a debit to Salaries and Wages Payable for​ $50,000.

• True

• False

Art​ Parrish, the sole employee of Parrish​ Sales, has gross salary for March of​ $4,000. The entire amount is under the OASDI limit of​ $110,100, and thus subject to FICA. His year−to−date pay has already exceeded the​ $7,000 cap for FUTA and SUTA. Which of the following is a part of journal entry in the payroll cycle to record the​ employer's payroll​ taxes?

• credit to Payroll Tax Expense

• debit to Cash

• credit to FICA—Medicare Tax Payable

• debit to FICA Tax Payable

Which of the following is true of good internal controls over​ payroll?

• Cash receipts from customers should be separated from the accounting for accounts receivable.

• Accounting for payroll should be separate from hiring and firing of employees.

• Hiring and firing employees should not be separated from accounting and from passing out paychecks.

• Disbursement of paychecks should not be separate from the function of maintaining payroll records.

The matching principle requires businesses to report Warranty Expense​ ________.

• in the period prior to which the company records the revenue related to that warranty

• in the

  long−term

  assets section of the balance sheet

• in the period after the related revenue is recorded

• in the same period that the company records the revenue related to that warranty