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G. Multiple Choice Instructions: Place the best answer for each of the following questions in the blank at the left. 1. The interest charged by
| G. Multiple Choice | |||||||||
| Instructions: Place the best answer for each of the following questions in the blank at the left. | |||||||||
| 1. The interest charged by the bank, at the rate of 12%, on a 90-day, non-interest- | |||||||||
| bearing note payable for $75,000 is: | |||||||||
| a. $1,000 | |||||||||
| b. $2,250 | |||||||||
| c. $3,000 | |||||||||
| d. $9,000 | |||||||||
| 2. The cost of a product warranty should be included as an expense: | |||||||||
| a. in the period of the sale of the product | |||||||||
| b. in the period of the collection of the cash from the sale of the product | |||||||||
| c. in the future period when the product is repaired or replaced | |||||||||
| d. in the future period when the cost of repairing the product is paid | |||||||||
| 3. An employee's rate of pay is $8 per hour, with time and a half for hours worked | |||||||||
| in excess of 40 during a week. If the employee works 50 hours during a week and has | |||||||||
| social security tax withheld at a rate of 6.0%, Medicare tax withheld at a rate of 1.5%, | |||||||||
| and federal income tax withheld at a rate of 15%, the employee's net pay for the week is: | |||||||||
| a. $440 | |||||||||
| b. $374 | |||||||||
| c. $341 | |||||||||
| d. $310 | |||||||||
| 4. An employee receives an hourly rate of $18, with time and a half for all hours worked | |||||||||
| in excess of 40 during a week. Payroll data for the current week are as follows: hours | |||||||||
| worked, 45; federal income tax withheld, $350; cumulative earnings for year prior to current | |||||||||
| week, $49,700; social security tax rate, 6.0%; Medicare tax rate, 1.5%. What is the gross | |||||||||
| pay for the employee? | |||||||||
| a. $475 | |||||||||
| b. $505 | |||||||||
| c. $720 | |||||||||
| d. $855 | |||||||||
| 5. Prior to the last weekly payroll period of the calendar year, the cumulative earnings of | |||||||||
| employees A and B are $99,800 and $21,000, respectively. Their earnings for the last | |||||||||
| completed payroll period of the year are $1,000 each. The amount of earnings subject to | |||||||||
| social security tax is $100,000, and the tax rate is 6%. All earnings are subject to Medicare | |||||||||
| tax at 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's | |||||||||
| total FICA tax (social security and Medicare) for this payroll period on the two salary amounts | |||||||||
| of $1,000 each? | |||||||||
| a. $75 | |||||||||
| b. $90 | |||||||||
| c. $102 | |||||||||
| d. $150 | |||||||||
| 6. Payroll taxes levied against employees become liabilities: | |||||||||
| a. when earned by the employee | |||||||||
| b. at the end of an accounting period | |||||||||
| c. the first of the following month | |||||||||
| d. at the time the liability for the employee's wages is paid | |||||||||
| 7. Which of the following items would not be considered a fringe benefit? | |||||||||
| a. vacations | |||||||||
| b. employee pension plans | |||||||||
| c. health insurance | |||||||||
| d. FICA benefits | |||||||||
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Standards On Auditing For Ca Students
Authors: Anshul Mittal
1st Edition
8182964962, 978-8182964969
