Known liabilities of estimated amounts are _____

Reported on the balance sheet

Contingent liabilities

Reported only in the notes to the financial statements

Ignored; record them when paid

On January 1, 2012, you borrowed $18,000 on a five-year, 5% note payable. At December 31, 2013, you should record _____

Nothing; the note is already on the books

Interest payable of $900

Cash payment of $18,000

Note receivable of $18,000

Your company sells $180,000 of goods and you collect sales tax of 8%. What current liability does the sale create? _____

Sales tax payable of $14,400

None; you collected cash up front

Unearned revenue of $14,400

Sales revenue of $194,400

Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell's attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be _____

No disclosure is required

Booked, as well as disclosed in the footnotes

Disclosed in the footnotes, with ranges of potential loss

Disclosed in the footnotes

The employer is responsible for which of the following payroll taxes? _____

All of the above

1.45% Medicare tax

Federal and state unemployment taxes

6.2% Social Security

Wells Electric (WE) owed Estimated warranty payable of $1,200 at the end of 2011. During 2012, WE made sales of $120,000 and expects product warranties to cost the company 3% of the sales. During 2012, WE paid $2,300 for warranties. What is WE's Estimated warranty payable at the end of 2012? _____

$2,300

$2,500

$4,800

$3,600

At December 31, your company owes employees for three days of the five-day workweek. The total payroll for the week is $7,800. What journal entry should you make at December 31? _____

Nothing because you will pay the employees on Friday.

Dr. salary expense $7,800; Cr. salary payable $7,800

Dr. salary expense $4,680; Cr. salary payable $4,680

Dr. salary payable $4,680; Cr. salary expense $4,680

An employee has year-to-date earnings of $105,000. The employee's gross pay for the next pay period is $5,000. If the FICA wage base is $106,800, how much FICA tax will be withheld from the employee's pay? _____

$310.00

$184.10

$382.50

$137.70

Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. The company makes principal payments of $5,000 each year plus interest at 8%. Which of the following is true? _____

After the first payment is made, the company owes $15,000 plus three year's interest

After the first payment is made, $5,000 would be shown as the current portion due on the long-term note

After the first payment, $15,000 would be shown as a long-term liability

Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet

Gloria Traxell is paid $800 for a 40-hour workweek and time-and-a-half for hours above 40. Traxell is single, and her income tax withholding is 10% of total pay. Traxell's only payroll deductions are payroll taxes. Compute Traxell's net (take-home) pay for the week. Use a 7.65% FICA tax rate, and carry amounts to the nearest cent. _____

856.44

832.50

$1,040

$800

How does a partnership get started? _____

The partners reach an agreement and begin operations

The partners register under the Uniform Partnership Act

The partners get a charter from the state

All of the above

Which characteristic identifies a partnership? _____

No business income tax

Unlimited life

Limited personal liability

All of the above

Abbott and Brown form a partnership. Abbott contributes $10,000 cash and $40,000 in inventory. Brown contributes $5,000 in cash and land with a current market value of $30,000 (cost of $15,000). Which of the following is correct? _____

Brown receives a bonus of $30,000 from Abbott

Brown, capital is debited for $20,000

Brown, capital is credited for $20,000

Brown, capital is credited for $35,000

Partner drawings _____

Increase partnership liabilities

Decrease partnership capital

Increase partnership capital

Decrease partnership net income

Charles pays $30,000 to Steven to acquire Steven's $15,000 interest in a partnership. The journal entry to record this transaction is _____

Dr. Steven, capital $30,000; Cr. Charles, capital $30,000

Dr. Steven, capital $45,000; Cr. Charles, capital $45,000

Dr. Charles, capital $15,000; Cr. Steven capital $15,000

Dr. Steven, capital $15,000; Cr. Charles, capital $15,000

Partnership financial statements report _____

Net income on the balance sheet

Revenues on the income statement

Expenses on the balance sheet

Liabilities on the income statement

Which characteristic of a corporation is most attractive? _____

Double taxation

Limited liability

Mutual agency

Items a, b, and c are correct

Which corporate characteristic is a disadvantage? _____

Limited liability

None are disadvantages

Mutual agency

Double taxation

The two basic sources of corporate capital are _____

Retained earnings and Dividends

Assets and equity

Paid-in capital and Retained earnings

Preferred and common

The amount of equity attributed per common share is called _____

Par value per share

Market value per share

Book value per share

Liquidation value per share