Question 1

Short-term notes payable:

Accepted Answer

A)   Are not negotiable.
B)   Cannot replace an account payable.
C)   Are a conditional promise to pay.
D)   Can be issued in return for money borrowed from a bank.
E)   Rarely involve interest charges.F) A) and D)
G) B) and C)

Question 2

A company's income before interest expense and income taxes in 2014 and 2015 is $487,500 and
$427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Accepted Answer

2014: 3.9; 2015: 3.4
Risk analysis: The ...

Question 3

Gross pay is:

Accepted Answer

A)   Total compensation earned by an employee before any deductions.
B)   Salaries after taxes are deducted.
C)   Deductions withheld by an employer.
D)   The amount of the paycheck.
E)   Take-home pay.F) A) and B)
G) C) and D)

Question 4

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Accepted Answer

A) True 
 B)False

Question 5

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

Accepted Answer

A) True 
 B)False

Question 6

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Accepted Answer

A) True 
 B)False

Question 7

A contingent liability is:

Accepted Answer

A)   An obligation not requiring future payment.
B)   Always of a specific amount.
C)   An obligation arising from a future event.
D)   An obligation arising from the purchase of goods or services on credit.
E)   A potential obligation that depends on a future event arising from a past transaction or event.F) B) and C)
G) A) and E)

Question 8

In order to be reported, liabilities must:

Accepted Answer

A)   Involve an outflow of cash.
B)   Always have a definite date for payment.
C)   Be for a specific amount.
D)   Sometimes be estimated.
E)   Be certain.F) B) and C)
G) None of the above

Question 9

The more  __________allowances an employee claims, the less federal income tax the employer will deduct from pay.

Accepted Answer

The answer of The more  __________allowances an employee claims,...

Question 10

A high value for the times interest earned ratio means that a company is a lower risk borrower.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll Accounting

Short-term notes payable:

Correct Answer
verified

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Correct Answer
verified

In order to be reported, liabilities must:

Correct Answer
verified

The more __________allowances an employee claims, the less federal income tax the employer will deduct from pay.

Correct Answer
verified

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Correct Answer
verified

A high value for the times interest earned ratio means that a company is a lower risk borrower.

Correct Answer
verified

A company's income before interest expense and income taxes in 2014 and 2015 is $487,500 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Correct Answer
verified
2014: 3.9; 2015: 3.4
Risk analysis: The ...
View Answer

Gross pay is:

Correct Answer
verified

A contingent liability is:

Correct Answer
verified

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

Short-term notes payable:

Correct AnswerverifiedShow Answer

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Correct AnswerverifiedShow Answer

In order to be reported, liabilities must:

Correct AnswerverifiedShow Answer

The more __________allowances an employee claims, the less federal income tax the employer will deduct from pay.

Correct AnswerverifiedShow Answer

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Correct AnswerverifiedShow Answer

A high value for the times interest earned ratio means that a company is a lower risk borrower.

Correct AnswerverifiedShow Answer

A company's income before interest expense and income taxes in 2014 and 2015 is $487,500 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Correct Answerverified2014: 3.9; 2015: 3.4Risk analysis: The ...View AnswerShow Answer

Gross pay is:

Correct AnswerverifiedShow Answer

A contingent liability is:

Correct AnswerverifiedShow Answer

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
2014: 3.9; 2015: 3.4
Risk analysis: The ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified