Known liabilities of estimated amounts are _____
| Reported on the balance sheet |
| 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 |
| 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? _____
| Federal and state unemployment taxes |
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? _____
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? _____
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. _____
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 |
Which characteristic identifies a partnership? _____
| Limited personal liability |
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? _____
| Items a, b, and c are correct |
Which corporate characteristic is a disadvantage? _____
The two basic sources of corporate capital are _____
| Retained earnings and Dividends |
| Paid-in capital and Retained earnings |
The amount of equity attributed per common share is called _____
| Liquidation value per share |
