WorksheetsAccounting Study Guide 10
Total questions: 42
Worksheet time: 24mins
Operating cycles are generally longer than a year.
True
False
The principal of a loan does not include any interest charges
True
False
An entertainment company received $6 million in cash for advance season ticket sales. Prior to the beginning of the season, these sales should be recorded as a liability.
True
False
Bonds allow a company to borrow large sums of money from many different investors.
True
False
If the market rate exceeds the stated interest rate, a bond will sell at a premium.
True
False
At the maturity date, the carrying value of a bond should always be equal to the face value.
True
False
The net amount of a bond liability that appears on the balance sheet is equal to the face value of the bond plus any related discount or minus any related premium.
True
False
The entry to record a bond retirement at maturity usually involves no gain or loss.
True
False
Bonds that are backed by a company’s assets are referred to as “secured” bonds
True
False
Bonds that are not backed by collateral are referred to as “debentures.”
True
False
Callable bonds can be converted to stock.
True
False
When a company issues bonds that include no periodic interest payments, the bonds are referred to as “zero-coupon” bonds.
True
False
The gross earnings for all employees is credited to Salaries and Salaries and Wages Payable.
True
False
FICA payments consist of Social Security taxes and Medicare taxes.
True
False
Contingent liabilities arise from past transactions, but depend on future events.
True
False
If the likelihood of a loss is reasonably possible, a contingent liability is recorded by making an appropriate journal entry.
True
False
The threshold for recording contingent liabilities under IFRS is higher than that under GAAP.
True
False
The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.
True
False
When the times interest earned ratio increases, the likelihood of default on liabilities decreases.
True
False
The straight-line method of amortization allocates the amount of bond premium or discount over each period of a bond’s life in amounts corresponding to the bond’s carrying value.
True
False
The effective-interest method of amortization is considered a conceptually superior method of accounting for bonds.
True
False
Current liabilities could include all of the following except:
an accounts payable due in 30 days.
a notes payable due in 9 months.
a bank loan due in 18 months.
any part of long-term debt due during the current period.
Current liabilities are due:
but not receivable for more than one year or the current operating cycle, whichever is longer.
but not payable for more than one year or the current operating cycle, whichever is longer.
and receivable within the current operating cycle or one year, whichever is longer.
and payable within the current operating cycle or one year, whichever is longer.
Obligations due to be paid within one year or the company’s operating cycle, whichever is longer, are classified as:
current assets
current liabilities
earned revenue
noncurrent liabilities
A typical classified balance sheet provides no information about which of the following items?
To whom the company owes money
For what the company owes money
How much the company owes
The proportion of the company's debts that will be paid in the short-term
Which of the following events does not create a liability?
Buying goods and services on credit
Obtaining a short-term loan
Issuing long-term debt
Remitting sales tax to the government
A company typically records the amount owed to suppliers for goods or services when:
they are ordered
a verbal commitment to purchase the goods or services has first been made
payment is made
the goods and services are received
Which of the following statements about payroll liabilities is correct?
Accrued payroll includes liabilities required by law or voluntarily requested by employees that have not yet been paid (or remitted).
Only employees are required to pay FICA taxes
Both employers and employees are required to pay unemployment taxes.
Accrued payroll liabilities do not include any voluntary deductions by employees for charitable contributions or union dues
During one pay period, your company distributes $130,500 to employees as net pay. The income tax withholdings were $19,000 and the FICA withholdings were $5,000. Total payroll costs to the company for this pay period, excluding any unemployment taxes, was:
$149,500
$130,500
$154,500
$159,500
If a company's gross salaries and wages are $12,000, and it withholds $1,800 for income taxes and $800 for FICA taxes, the journal entry to record the employees' pay should include a:
debit to Salaries and Wages Expense for $9,400
debit to Salaries and Wages Payable for $9,400.
credit to Salaries and Wages Payable for $12,000.
credit to Salaries and Wages Payable for $9,400.
Bobby Darling is the only employee of Atlantic Records, Inc. During the first week of January, Darling earned $800 and had federal and state income tax withholdings of $40 and $15, respectively. FICA taxes are 7.65% on earnings up to $117,000. State and federal unemployment taxes for the period are $50 and $8, respectively.
What would be the amount of Darling’s payroll check for the first week of January
$683.80
$741.80
$628.80
$625.80
Bobby Darling is the only employee of Atlantic Records, Inc. During the first week of January, Darling earned $800 and had federal and state income tax withholdings of $40 and $15, respectively. FICA taxes are 7.65% on earnings up to $117,000. State and federal unemployment taxes for the period are $50 and $8, respectively.
What is the employer’s payroll tax expense for the week?
$113.00
$119.20
$174.20
$235.40
Payroll taxes paid by employees include which of the following?
Federal income tax, federal unemployment tax, and Medicare
Social security, federal unemployment tax, and state unemployment tax
Social security, federal unemployment tax, and state unemployment tax
Federal income tax withheld, state income tax withheld, and Medicare
Which of the following statements about payroll is correct?
Payroll deductions are an expense of the company.
When recording the payroll, Salaries and Wages Expense equals the sum of all the deductions.
The net pay is debited to Salaries and Wages Expense when the payroll is recorded.
Gross earnings are computed by multiplying the time worked by the pay rate promised by the employer.
Which of the following must be paid by both the employee and the employer?
FICA taxes
State unemployment tax
State withholding tax
Federal unemployment tax
Employer payroll taxes
represent the federal taxes withheld from the employees’ paychecks.
are the amounts paid by the employee.
are an added payroll expense beyond the wages and salaries earned by employees.
represent the FICA taxes withheld from employees’ paychecks.
In October, you sign a note for $50,000 in order to buy new equipment. The note is due in five years, at 8% annual interest. Semiannual interest payments are due each March and September. Assuming no other long-term debt, what is the initial balance in the related long-term debt account?
$46,000
$50,000
$52,000
$54,000
A company purchased equipment by issuing a $200,000, one-year, 8% note payable. The transaction would be recorded in the accounting records with a credit to Notes Payable for:
$200,000
$216,000
$184,000
$208,000
On October 1, Angelica Inc. signs a note for $200,000 to provide the funds needed to build a new facility. The note is due in 10 years, includes an annual interest rate at 7%, and requires semiannual interest payments each April and October. The journal entry to record the issuance of the promissory note should debit:
Notes Payable for $200,000, debit Interest Expense for $14,000, credit Cash for $200,000, and credit Interest Payable for $14,000.
Accrued Interest and credit Cash for $14,000.
Cash and credit Notes Payable for $200,000.
Cash for $200,000, debit Interest Expense for $14,000, credit Notes Payable for $200,000, and credit Interest Payable $14,000.
Interest on an obligation is recorded:
as time passes
when goods are purchased on account
at maturity
when a bank loan is obtained
A one-year, $15,000, 12% note is signed on April 1. If the note is repaid on September 1 of the same year, how much interest expense is incurred?
$1,800
$900
$750
$600
The total amount of interest that will be paid on a four-month, $6,500, 9% note payable equals:
$585
$292
$146
$195
