ACCT 301B Exam 1

T/F: State and federal unemployment taxes are imposed on both employers and employees

• True

• False

Federal income taxes withheld by the employer on behalf of the employee are recorded as

• current liabilities

• receivables

• expenses.

• unearned revenues

T/F: Gain contingencies are not recorded

• True

• False

Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?

• Amount of loss is reasonably estimable and event occurs infrequently

• Amount of loss is reasonably estimable and occurrence of event is probable

• Event is unusual in nature and occurrence of event is probable.

• Event is unusual in nature and event occurs infrequently

T/F: If a company intends to refinance a short-term liability on a long-term basis, the liability must be reported as current unless the company has consummated the refinancing agreement by the balance sheet date

• True

• False

Gain contingencies include all of the following except

• possible receipts of donations and bonuses.

• All of the options are gain contingencies.

• pending court cases where the probable outcome is favorable.

• tax loss carry forwards.

A loss related to general or unspecified business risks is

• sometimes accrued.

• usually accrued

• not accrued

• always accrued.

Employer payroll taxes include all of the following except

• federal unemployment taxes.

• state income taxes.

• state unemployment taxes.

• FICA taxes.

T/F: When the effective rate of a bond is lower than the stated rate, the bond sells at a discount.

• True

• False

If a bond sold at 97, the market rate was:

• greater than the stated rate.

• equal to the coupon rate.

• equal to the stated rate.

• less than the stated rate.