Theory 1. All of the following are current liabilities except A. Accounts payable. B. Mortgage payable. C. Sales tax payable. D. Unearned rent. 2. A note payable may be issued to creditors to satisfy an account payable created earlier. A. True. B. False. 3. Which of the following is referred to as net pay? A. Gross pay minus federal and state income taxes. B. All deductions plus all withholdings. C. Take-home pay plus all deductions. D. Gross pay minus all deductions. 4. Which of the following payroll taxes are paid by both the employee and employer? A. Medicare Tax. B. Social Security Tax. C. Federal and state unemployment tax. D. Both A and B above. 5. When a company sells a product under warranty, a contingent liability is created that that should be recorded in the year of the sale. A. True. B. False. 6. ASU Company has been sued for product failures allegedly resulting in injuries to the individual bringing the lawsuit. ASU's lawyers believe that it is reasonably possible that the lawsuit will result in an actual liability. Which of the following actions should be taken by ASU's management? A. Management should consider resigning. B. Management should record the liability. C. Management should disclose the liability. D. Management should not record nor disclose the liability. Reorder Form No. 882-E www.ScantronStore.com 600.722.6876 NTRON