Question 1

Barry is a partner in Simple Solutions, Inc.. Barry's share of the partnership income is $18,600 and his average partnership equity is $155,000. His partner return on equity equals 8.33.

True

False

5 points

Question 2

A payroll register usually shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.

True

False

5 points

Question 3

Sellers allow customers to use credit cards:

		To avoid having to evaluate a customer's credit standing for each sale.
		To lessen the risk of extending credit to customers who cannot pay.
		To speed up receipt of cash from the credit sale.
		To increase total sales volume.
		All of these.

5 points

Question 4

Known liabilities:

		Include accounts payable, notes payable, and payroll.
		Are obligations set by agreements, contracts, or laws.
		Are measurable.
		Are definitely determinable.
		All of these.

5 points

Question 5

All of the following statements regarding liabilities are True except:

		A liability is a probable future payment of assets or services.
		Unearned future wages to be paid to employees should be recorded as liabilities.
		For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services.
		Information about liabilities is more useful when the balance sheet identifies them as either current or long term.
		All of these are True.

5 points

Question 6

Obligations not due within one year or the company's operating cycle, whichever is longer, are reported as current liabilities.

True

False

5 points

Question 7

A patent:

		Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
		Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years.
		Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
		Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately.
		Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.

5 points

Question 8

A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

		A debit to Organization Expenses for $3,000.
		A debit to Organization Expenses for $5,000.
		A credit to Common Stock for $5,000.
		A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000.
		A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

5 points

Question 9

Adam is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the amount of the employer's payroll taxes expenses for this employee?

		$2009.21
		$1131.31
		$2506.48
		$1054.04

5 points

Question 10

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

		Always equal to its par value.
		Always equal to its stated value.
		Referred to as paid-in capital.
		Referred to as retained earnings.
		Always below its stated value.

5 points

Question 11

A potential lawsuit claim is recorded when the claim can be reasonably estimated and it is reasonably possible.

True

False

5 points

Question 12

A company can have a liability even if the amount of the obligation is unknown.

True

False