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ACC111: Financial Accounting II Chapter 8 Exam Name Nathan HuertaTODA MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) All of the following are reported as current liabilities EXCEPT: A) unearned revenues for services to be provided in 16 months. B) payroll tax payable. C) notes payable due in 6 months. D) accounts payable. 2) Which of the following liability accounts is usually NOT an accrued liability: A) Notes Payable. C) Taxes Payable. B) Wages Payable. D) Warranties Payable. 3) Notes payable due in six months are reported as: A) current liabilities on the balance sheet. B) a reduction to notes receivable on the balance sheet. C) current assets on the balance sheet. D) long-term liabilities on the balance sheet. 4) Unearned Service Revenue relating to services to be provided in one month, is reported on the balance sheet as: A) a component of stockholders' equity. B) a revenue account. C) a long-term liability. D) a current liability. 5) The most frequently used current liabilities are: A) accounts payable, notes payable, and inventories. B) cash, notes payable, and accrued liabilities. C) accounts payable, accounts receivable, and accrued liabilities. D) accounts payable, notes payable, and accrued liabilities. 6) Which is NOT a current liability? A) unearned revenue B) service revenue C) accrued liabilities D) accounts payable 7) Long-term liabilities are mostly for: A) operating activities B) investing activities. C) financing activities. D) both A and B. 8) Current liabilities are mostly for: A) operating activities B) investing activities. C) financing activities. D) both A and B. 9) Typically, the hard part about computing the accounts payable turnover is getting the: A) average inventory. B) ending inventory. C) purchases from suppliers. D) beginning inventory. 10) How do you compute the purchases from suppliers: A) Cost of goods sold - ending inventory + beginning inventory. B) Cost of goods sold - ending inventory - beginning inventory. C) Cost of goods sold + ending inventory + beginning inventory. D) Cost of goods sold + ending inventory - beginning inventory. Page 1 of 5ACCI1 Chi ACC111: Financial Accounting II Chapter 8 Exam Name 11) If the accounts payable turnover is 5.4, what is the days' payable outstanding? (Round your answer to the nearest day.) A) 18 days B) 55 days C) 68 days D) 58 days 12) A typical credit period for payment is: A) 30 days. B) 10 days. C) 15 days. D) 45 days. 13) If Cost of Goods Sold is $300,000, beginning inventory is $29,000, and ending inventory is $30,000, then the purchases from suppliers (assume all on account) would be: A) $359,000. B) $299,000. C) $59,000. D) $301,000. 14) On December 31st, Datton, Inc. has cost of goods sold of $550,000, ending inventory is $102,000, beginning inventory decimal places.) is $120,000; and average accounts payable is $114,000. What is the accounts payable turnover? (Round your answer two A) 2.88 B) 4.98 C) 4.67 D) 7.77 15) To record the accrued interest on a note payable at the end of the accounting period, a journal entry should be written to debit: A) Notes Payable. B) Interest Expense. C) Cash. D) Interest Payable. 16) Which account would be reported on the income statement? A) Interest Expense B) Wages Payable C) Notes Payable D) Interest Payable 17) To record the accrued interest on a note payable at the end of the accounting period, a journal entry should be written to credit: A) Cash. B) Notes Payable. C) Interest Payable. D) Interest Expense. 18) Michigan Bank lends Detroit Furniture Company $110,000 on December 1. Detroit Furniture Company signs a $110,000, 9%, 4-month note. The total cash paid for interest (only) at maturity of the note is: (Round your final answer to the nearest dollar.) A) $9,900. B) $1,100. C) $6,600. D) $3,300. 19) FICA tax includes: A) medicare and salaries payable C) social security and medicare. B) income tax and medicare. D) social security and income tax. 20) Employers must match employee contributions (up to a maximum amount) for: A) social security. B) income tax. C) medicare. D) A and C. Page 2 of 5ACC111: Financial Accounting II Chapter 8 Exam Name Problem 2 (5 Points) Devin's Animal Shop has the following information for the pay period of March 15 to March 31: Gross payroll $20,000 FICA tax rate 7.65% Federal income tax withheld 15% Required: Prepare the journal entry to record the accrued payroll on March 31 and the journal entry to remit the payroll taxes to the government on April 15. Omit explanations. Do not record employer payroll taxes.ACC111: Financial Accounting II Chapter 8 Exam Name_ 21) When a business receives cash from customers before earning the revenue, the A) Accounts Receivable account is credited. C) Sales Tax Payable B) Unearned Revenue D) Accounts Payable revenue is the: 22) The accounting principle that requires a company to record warranty expense in the same period that it records sales A) conservatism principle. C) going concern principle. B) expense recognition principle. D) consistency principle. 23) Aisha Company paid $1,500 cash to replace a wheel on equipment sold under a two-year warranty in the prior year. The entry to record the payment will debit: A) Repair Expense and credit Cash. B) Operating Expense and credit Cash. C) Estimated Warranty Payable and credit Cash. D) Warranty Expense and credit Cash. 24) Montana Company sold merchandise with a retail price of $30,000 for cash. Montana Company is required to collect 8% state sales tax. The total cash received from customers was: A) $27,600. B) $32,400. C) $2,400. D) $30,000. 25) Total wages employees earned for the payroll period are called The amount of wages the employees take home is the A) gross pay; withholding amount B) net pay; taxes withheld amount C) gross pay; net pay D) net pay; gross pay 26) Nationwide Magazine sells 64,000 subscriptions on account in March. The subscription price is $15 each. The subscriptions start in April. The journal entry in March would include a: A) credit to Unearned Subscription Revenue for $960,000. B) credit to Cash for $960,000. C) debit to Unearned Subscription Revenue for $960,000. D) debit to prepaid subscriptions for $960,000. 27) Potential liabilities that depend on future events arising out of past events are called: A) contingent liabilities. B) current liabilities. C) estimated liabilities. D) long-term liabilities. 28) A company has a pending lawsuit that has a remote possibility of being settled in favor of the plaintiff who is a former employee. What should the company do? A) Nothing. B) Make a disclosure in a financial statement footnote. C) Make a note to the financial statements and prepare a journal entry. D) Prepare a journal entry. Page 3 of 5ACC111: Financial Accounting II Chapter 8 Exam Name 29) The FASB provides guidelines to account for contingent liabilities by: A) preparing a new financial statement. B) adjusting journal entries only. C) journal entries and footnote disclosures. D) footnote disclosures only. 30) To accrue a contingent liability means to: A) do nothing. C) disclose estimates of the liability. B) report it as a footnote only. D) make an adjusting journal entry. Problem 1 (5 Points) On December 1, 2019, Goliath Corporation borrowed $120,000 on a three-month, 10% note. Goliath Corporation's year end is December 31. Required: 1. Prepare the journal entries in 2019 and 2020 for Goliath Corporation. Omit explanations. 2. At December 31, 2019, what is reported on the balance sheet as current liabilities? 1. Date Accounts Debit Credit 2. Current Liabilities