A company regularly purchases materials from a manufacturer on credit. Payments for these purchases occur within the companys operating cycle. They do not include interest and are established with an invoice outlining purchase details, credit terms, and shipping charges. Which current liability situation does this best describe?

1. sales tax payable
2. accounts payable
3. unearned revenue
4. income taxes payable

A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3?

1. $50,000
2. $150,000
3. $100,000
4. $250,000

A client pays cash in advance for a magazine subscription to Living Daily. Living Daily has yet to provide the magazine to the client. What accounts would Living Daily use to recognize this advance payment?

1. unearned subscription revenue, cash
2. cash, subscription revenue
3. subscription revenue, unearned subscription revenue
4. unearned subscription revenue, subscription revenue, cash

Which of the following best describes a contingent liability that is likely to occur but cannot be reasonably estimated?

1. reasonably possible
2. probable and estimable
3. probable and inestimable
4. remote

What accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled?

1. warranty liability and cash
2. warranty expense and cash
3. warranty liability and warranty expense, cash
4. warranty expense and warranty liability

Which of the following accounts are used when a short-term note payable with 5% interest is honored (paid)?

1. short-term notes payable, cash
2. short-term notes payable, cash, interest expense
3. interest expense, cash
4. short-term notes payable, interest expense, interest payable

Sunlight Growers borrows $250,000 from a bank at a 4% annual interest rate. The loan is due in three months. At the end of the three months, the company pays the amount due in full. How much did the company remit to the bank?

1. $250,000
2. $10,000
3. $252,500
4. $2,500

An employee earns $8,000 in the first pay period. The FICA Social Security Tax rate is 6.2%, and the FICA Medicare tax rate is 1.45%. What is the employees FICA taxes responsibility?

1. $535.50
2. $612
3. None, only the employer pays FICA taxes
4. $597.50
5. $550

Employees at Rayon Enterprises earn one day a month of vacation compensation (twelve days total each year). Vacation compensation is paid at an hourly rate of $45, based on an eight-hour work day. Rayons first pay period is January. It is now April 30, how much vacation liability has accumulated if the company has four employees and no vacation compensation has been paid?

1. $1,440
2. $4,320
3. $5,760
4. $7,200