Question 1

A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

Accepted Answer

A) True 
 B)False

Question 2

Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx.  Salaries Payable would be recorded for

Accepted Answer

A)   $16,000
B)   $ 9,808
C)   $10,800
D)   $11,040E) All of the above
F) A) and B)

Question 3

The accounting for defined benefit plans is usually very easy and straight forward.

Accepted Answer

A) True 
 B)False

Question 4

The discount on a note payable is charged to an account that has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 5

Federal unemployment compensation taxes that are collected by the federal government are paid directly to the unemployed but are allocated among the states for use in state programs.

Accepted Answer

A) True 
 B)False

Question 6

Current liabilities are:

Accepted Answer

A)   due and receivable within one year.
B)   due and to be paid out of current assets within one year.
C)   due, but not payable for more than one year.
D)   payable if a possible subsequent event occurs.E) All of the above
F) B) and D)

Question 7

On June 8, Alton Co. issued an $90,000, 6%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note?

Accepted Answer

A)   $90,450
B)   $90,000
C)   $91,800
D)   $95,400E) C) and D)
F) A) and B)

Question 8

Form W-2 is called the Wage and Tax Statement.

Accepted Answer

A) True 
 B)False

Question 9

On July 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Alton Co. ends July 31. Using the 360-day year in your calculations, what is the amount of interest expense recognized by Alton in the current fiscal year?

Accepted Answer

A)   $1,200.00
B)   $106.67
C)   $306.67
D)   $400.00E) A) and B)
F) A) and C)

Question 10

Which of the following is not an internal control procedure for payroll?

Accepted Answer

A)   observe clocking in and out time for the employees
B)   payroll depends on a fired employee's supervisor to notify them when an employee has been fired
C)   payroll requires employees to show identification when picking up their paychecks
D)   changes in pay rates on a computerized system must be tested by someone independent of payrollE) C) and D)
F) B) and D)

Question 11

Which of the following is required to be withheld from employee's gross pay?

Accepted Answer

A)   both federal and state unemployment compensation
B)   only federal unemployment compensation tax
C)   only federal income tax
D)   only state unemployment compensation taxE) B) and C)
F) A) and B)

Question 12

The journal entry a company uses to record the estimated accrued product warranty liability is

Accepted Answer

A)   debit Product Warranty Expense; credit Product Warranty Payable
B)   debit Product Warranty Payable; credit Cash
C)   debit Product Warranty Expense; credit Cash
D)   debit Product Warranty Payable; credit Product Warranty ExpenseE) B) and C)
F) A) and B)

Question 13

Most employers are required to withhold federal unemployment taxes from employee earnings.

Accepted Answer

A) True 
 B)False

Question 14

The amount of money a borrower receives from the lender is called discount rate.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is the most desirable quick ratio?

Accepted Answer

A)   1.20
B)   1.00
C)   0.95
D)   0.50E) B) and C)
F) A) and D)

Question 16

Quick assets include

Accepted Answer

A)   cash; cash equivalents, receivables, prepaid expenses, and inventory
B)   cash; cash equivalents, receivables, and prepaid expenses
C)   cash; cash equivalents, receivables, and inventory
D)   cash; cash equivalents, and receivablesE) C) and D)
F) A) and C)

Question 17

Federal unemployment taxes are paid by the employer and the employee.

Accepted Answer

A) True 
 B)False

Question 18

On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the following year?

Accepted Answer

A)   $1,200.00
B)   $1,208.89
C)   $1,306.67
D)   $1,600.00E) A) and B)
F) B) and D)

Question 19

A borrower has two alternatives for a loan: (a) issue a $480,000, 60-day, 8% note or (2) issue a $480,000, 60-day note that the creditor discounts at 8%. (Assume a 360-day year is used for interest calculations.)
Required:

Accepted Answer

The answer of A borrower has two alternatives for a...

Question 20

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

Accepted Answer

A)   6.25%
B)   10.00%
C)   10.26%
D)   9.75%E) A) and C)
F) A) and B)

Exam 11: Current Liabilities and Payroll

Most employers are required to withhold federal unemployment taxes from employee earnings.

Correct AnswerverifiedShow Answer

On July 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Alton Co. ends July 31. Using the 360-day year in your calculations, what is the amount of interest expense recognized by Alton in the current fiscal year?

Correct AnswerverifiedShow Answer

Which of the following is required to be withheld from employee's gross pay?

Correct AnswerverifiedShow Answer

Quick assets include

Correct AnswerverifiedShow Answer

On June 8, Alton Co. issued an $90,000, 6%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note?

Correct AnswerverifiedShow Answer

On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the following year?

Correct AnswerverifiedShow Answer

The accounting for defined benefit plans is usually very easy and straight forward.

Correct AnswerverifiedShow Answer

Which of the following is the most desirable quick ratio?

Correct AnswerverifiedShow Answer

Current liabilities are:

Correct AnswerverifiedShow Answer

Which of the following is not an internal control procedure for payroll?

Correct AnswerverifiedShow Answer

Form W-2 is called the Wage and Tax Statement.

Correct AnswerverifiedShow Answer

Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx. Salaries Payable would be recorded for

Correct AnswerverifiedShow Answer

Federal unemployment taxes are paid by the employer and the employee.

Correct AnswerverifiedShow Answer

Federal unemployment compensation taxes that are collected by the federal government are paid directly to the unemployed but are allocated among the states for use in state programs.

Correct AnswerverifiedShow Answer

A borrower has two alternatives for a loan: (a) issue a $480,000, 60-day, 8% note or (2) issue a $480,000, 60-day note that the creditor discounts at 8%. (Assume a 360-day year is used for interest calculations.) Required:

Correct AnswerverifiedShow Answer

A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

Correct AnswerverifiedShow Answer

The discount on a note payable is charged to an account that has a normal credit balance.

Correct AnswerverifiedShow Answer

The journal entry a company uses to record the estimated accrued product warranty liability is

Correct AnswerverifiedShow Answer

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

Correct AnswerverifiedShow Answer

The amount of money a borrower receives from the lender is called discount rate.

Correct AnswerverifiedShow Answer

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