6. Benitez Co. had sales of $800,000 in 2016. The company expects to incur warranty expenses amounting to 3% of sales. There were $13,000 of warranty obligations paid in cash during 2016. Based on this information:

A. Warranty claims would decrease net earnings by $4,000 in 2016.

B. Cash would increase by $17,000 as a result of the accounting events associated with warranties in 2016.

C. The warranties payable account would increase by $11,000 in 2016.

D. Choose either A, B, or C

Payroll and Fringe Benefits

7. Greer Company pays Jamal Perry a salary of $3,000 per week. How much FICA tax must Greer pay on Jamals behalf, including both the employee and employer portions?

A. $225.

B. $360.

C. $0.00 Jamal is responsible for making his own payments.

D. $450.

8. Which of the following is not an item deducted from salary expense to arrive at net pay?

A. FICA tax for Social Security.

B. FICA tax for Medicare.

C. Federal unemployment tax.

D. These answer choices are all deducted from salary expense to arrive at net pay.

Classified B/S MAKE SURE YOU CAN IDENTIFY CATEGORIES like in LECTURE on a B/S

9. On a classified balance sheet, the financial statement user will be able to distinguish between:

A. cash flow from operations and cash flow from investing activities.

B. current and noncurrent assets.

C. product and period costs.

D. none of these answer choices are correct.

Current Ratio

10. A company's classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. The company's current ratio is closest to:

A. 0.69 to 1

B. 1.44 to 1

C. 1.16 to 1

D. 3.26 to 1