Under both the allowance method and the direct-write off method of accounting for uncollectible accounts, the amount of bad debts expense is to be estimated at the end of each accounting period.

True False

Ordinary repairs to plant assets are referred to as revenue expenditures.

True

False

The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested.

True

False

If the sale price of a plant asset is higher than its book value, there will be a loss.

True

False

A certain contingent liability was evaluated at year-end, and considered to have a remote possibility of becoming an actual liability. If the accountant decided not to report it on the balance sheet or in the notes to the financial statement, what effect would this have on the financial reporting of the company?

There would be no effect.

The liabilities on the balance sheet would be understated.

The information about the transaction would be inadequately disclosed in the notes.

The net income of the company would be understated.

Steve, an employee of Panache Inc., has gross salary for March of $4,000. The entire amount is under the OASDI limit of $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Steve has a deduction of $320 for health insurance and $80 for United Way. Which of the following is included in the entry in the payroll cycle to record the liability of payroll withholding deductions?

		debit to Salary Payable
		credit to United Way Payable
		debit to FICA Tax Payable
		debit Cash