1)Which of the following statements about thetimes-interest-earned ratio istrue?

A.Thetimes-interest-earned ratio is also called theinterest-coverage ratio.

B.Thetimes-interest-earned ratio is calculated by dividing gross income by interest expense.

C.A lower ratio indicates a higher debt paying ability.

D.Debt reduction leads to an increase in interest expense.

2) Investors use thetimes-interest-earned ratio to evaluate acompany's ability to pay interest expense.

True

False

3) Which of the following would be included in the journal entry to record the payment of sales taxpayable?

A.a debit to Sales Tax Expense

B.a credit to Sales Tax Payable

C.a debit to Sales Tax Payable

D.a credit to Sales Tax Expense

4)The oldage, survivors, and disability insurance component of FICA tax is imposed on the entire amount of an individualemployee's earnings.

True

False

5) Keith, an employee ofSunbeam, Inc., has gross salary for May of$15,000. The entire amount is under the OASDI limit of$118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of20%. Which of the following is a part of the journal entry to record the disbursement of his netpay? (Assume a FICAOASDI Tax of6.2% and FICAMedicare Tax of1.45%. Round the final answer to the nearestdollar.)

A.credit to Cash for$10,852.50

B.debit to Employee Income Tax Payable of$10,852.50

C.debit to Cash for$10,852.50

D.debit to FICA Tax Payable of$10,852.50

6)Keith, an employee ofSunbeam, Inc., has gross salary for May of$15,000. The entire amount is under the OASDI limit of$118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of20%. Which of the following is a part of the journal entry to record the disbursement of his netpay? (Assume a FICAOASDI Tax of6.2% and FICAMedicare Tax of1.45%. Round the final answer to the nearestdollar.)

A.credit to Cash for$10,852.50

B.debit to Employee Income Tax Payable of$10,852.50

C.debit to Cash for$10,852.50

D.debit to FICA Tax Payable of$10,852.50

8)All Things Digital Company starts the year with a credit balance of$2,600in its Estimated Warranty Payable account. During theyear, there were$218,000in sales and$4,500in warranty repair payments. All Things Digital estimates warranty expense at 2% of sales. At the end of theyear, what is the balance in the Estimated Warranty Payableaccount?

A.$2,600debit

B.$2,460credit

C.$4,360debit

D.$4,500credit

9)Peter earns$18.50per hour for straight time (40 hours), and the company pays him timeandahalf for overtime. He worked 43 hours at his job during the first week of March 2018. What wasPeter's gross pay for theweek?

A.$ 800.00

B.$ 795.50

C.$823.25

D.$ 1,193.25

10)Dan Jones and Pat Smith are two employees of Lone Star Company. In January2019, Dan's gross pay was$5,500, andPat's gross pay was$7,900. All earnings are subject to FICAOASDI Tax of 6.2% and FICAMedicare Tax of 1.45%. Which of the following would be included in the entry to record the payroll tax expense to be paid out by Lone Star Company forJanuary?

A.a debit to FICAOASDI Taxes Payable for$ 194.30

B.a debit to Salaries Payable to employees for$ 194.30

C.a credit to Salaries Expense for$ 194.30

D.a credit to FICAMedicare Taxes Payable for$ 194.30

11)Which of the following is an important internal control overpayroll?

A.separating the duties of the disbursement of paychecks from the recording of payroll transactions in the ledger

B.separating the duties of approving invoices from signing disbursement checks

C.separating the duties of safeguarding property fromrecord-keeping of property

D.separating the duties of cash disbursement from bank reconciliations

12)A contingency was evaluated atyear-end and considered to have a remote possibility of becoming an actual liability. If this is not reported on the balance sheet or in the notes to the financialstatements, it could be considered a violation of generally accepted accounting principles.

True

False

13)A contingency was evaluated atyear-end and considered to have a remote possibility of becoming an actual liability. If this is not reported on the balance sheet or in the notes to the financialstatements, it could be considered a violation of generally accepted accounting principles.

True

False

16)A company sells$180,000(sales price) of goods and collects sales tax of8%. What current liability does the salecreate?

A.Sales tax payable of$14,400

B.Sales revenue of$194,400

C.Unearned revenue of$14,400

D.None; the company collected cash up front.

17)State unemployment compensation tax(SUTA) is paid by the employer and is not deducted from anemployee's gross earnings.

True

False

18)On April1, 2019, Orbit Services received$10,200in advance of performing the services from a customer for three months of service April, May and June. What would be the journal entry to adjust the accounts at the end ofMay? (Do not round any intermediatecalculations, and round your final answer to the nearestdollar.)

A.Debit Unearned Revenue$6,800, and credit Service Revenue$6,800.

B.Debit Service Revenue$3,400, and credit Unearned Revenue$3,400.

C.Debit Unearned Revenue$10,200, and credit Service Revenue$10,200.

D.Debit Service Revenue$6,800, and credit Accounts Receivable$6,800.