Question 1

Which of the following is pay stated as a percentage of a sale amount?

Accepted Answer

A)  Benefits
B)  Wages
C)  Commission
D)  BonusesE) B) and C)
F) None of the above

Question 2

Which of the following is pay over and above base salary, usually paid for exceptional performance?

Accepted Answer

A)  Wages
B)  Commission
C)  Benefits
D)  BonusesE) A) and D)
F) A) and C)

Question 3

Employers must deduct income tax from an individual employee's earnings.

Accepted Answer

A) True 
 B)False

Question 4

General Store offers a warranty on its sales. At 1 January, estimated warranty payable was $6 000. During the year, General Stores paid warranty claims of $500 and recorded warranty expense of $1 00. What is the account name and amount of the current liability that will be reported on the balance sheet as at 31 December?

Accepted Answer

A)  Warranty expense $6 500
B)  Estimated warranty payable $6 500
C)  Warranty expense payable $5 500
D)  Estimated warranty payable $ 7 500E) A) and B)
F) None of the above

Question 5

In which of the following periods should the estimated warranty liability be debited?

Accepted Answer

A)  The period when the product is sold
B)  The period when the product is shipped to the customer
C)  The period when cash is collected for the sale of the product
D)  The period when cash is paid to repair or replace the productE) A) and B)
F) All of the above

Question 6

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4 000. He is subject to income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for voluntary superannuation. The first entry in the payroll cycle to record salary expense should include which of the following?

Accepted Answer

A)  Credit Cash
B)  Debit to Employee benefits payable
C)  Debit to Health insurance expense
D)  Credit to Salary payableE) A) and B)
F) A) and C)

Question 7

Estimated warranty payable would be included in the operating expense section of the income statement.

Accepted Answer

A) True 
 B)False

Question 8

General Stores borrowed $50 000 at 6% interest on a long- term loan payable on 31 August. At 31 December, interest plus $10 000 of the principal are payable within one year. What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Accepted Answer

A)  Interest payable $3 000
B)  Interest payable $2 000
C)  Interest payable $600
D)  Interest payable $1 000E) A) and B)
F) None of the above

Question 9

Which of the following is associated with cash received in advance for services to be performed in the future?

Accepted Answer

A)  Estimated warranty payable
B)  Accounts payable
C)  Unearned revenue
D)  Accrued expenseE) B) and C)
F) A) and B) C

Question 10

Which of the following is a reason that many companies require a photo ID when employees pick up their pay cheques?

Accepted Answer

A)  To make sure an employee's work hours have been accurately reported
B)  To improve efficiency of the payroll disbursement process
C)  To avoid writing a pay cheque to a fictitious person
D)  To make sure all employees are legal adultsE) C) and D)
F) A) and D) C

Question 11

ABC signed a 5- year, 9% note payable for $80 000 on 1 May 2014. Which account will be credited when the note paid at maturity?

Accepted Answer

A)  Interest payable
B)  Cash
C)  Interest expense
D)  Note payableE) B) and D)
F) A) and B)

Question 12

When the likelihood of an actual loss is probable, and the amount can be estimated, it should be recorded as an expense and as a liability.

Accepted Answer

A) True 
 B)False

Question 13

On 20 June 2013, Parker Services received $2 400 in advance from a customer for one month's service. The journal entry to adjust the accounts at the end of June would be which of the following?

Accepted Answer

A)  Debit Unearned service revenue $2 400 and credit Service revenue $2 400.
B)  Debit Service revenue $1 600 and credit Unearned service revenue $1 600.
C)  Debit Service revenue $800 and credit Accounts receivable $800.
D)  Debit Unearned service revenue $800 and credit Service revenue $800.E) None of the above
F) All of the above

Question 14

A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a reason that many companies maintain two payroll bank accounts?

Accepted Answer

A)  To make bank reconciliations simpler
B)  To separate the duties of human resources personnel and accounting personnel
C)  To prove an employee's hours worked
D)  To avoid writing a pay cheque to a fictitious personE) A) and D)
F) None of the above

Question 16

Which of the following is a liability, created when a company receives cash for services to be provided in the future?

Accepted Answer

A)  Estimated warranty payable
B)  Accrued liability
C)  Service revenue
D)  Unearned revenueE) B) and C)
F) None of the above

Question 17

Which of the following accounting principles requires that warranty expenses must be estimated and recognised in the same period as the related sales revenue is recognised?

Accepted Answer

A)  The matching principle
B)  The consistency principle
C)  The disclosure principle
D)  The profit recognition principleE) All of the above
F) C) and D) A

Question 18

Art Parrish is the sole employee of Parrish Sales. His company pays a portion of his health insurance premium, and also contributes to a superannuation. The company share of the health insurance premium is $400, and the company contribution to superannuation is $550. The second journal entry in the payroll cycle to record the employee benefits to be paid by the company should include which of the following?

Accepted Answer

A)  Credit Superannuation expense
B)  Credit Health insurance expense
C)  Debit Employee benefits payable
D)  Credit Employee benefits payableE) B) and D)
F) B) and C)

Question 19

Which of the following is a major control risk in the payroll area?

Accepted Answer

A)  Contracts being awarded to relatives of employees
B)  Expenses being recorded as assets in order to manipulate earnings
C)  Theft of inventory by staff
D)  Fictitious persons cashing pay chequesE) B) and C)
F) None of the above

Question 20

Which of the following is a characteristic of a current liability?

Accepted Answer

A)  A current liability is a liability that is due within 10 days.
B)  A current liability is a liability that is due within 30 days.
C)  A current liability is a liability that is due within one year or one operating cycle, whichever is longer.
D)  A current liability is a liability that is due in longer than a one- year period, or one operating cycle.E) A) and C)
F) B) and C)

Exam 11: Current Liabilities and Payroll

Which of the following is pay stated as a percentage of a sale amount?

Correct Answer
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Which of the following is pay over and above base salary, usually paid for exceptional performance?

Correct Answer
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Employers must deduct income tax from an individual employee's earnings.

Correct Answer
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Correct Answer
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In which of the following periods should the estimated warranty liability be debited?

Correct Answer
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Correct Answer
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Estimated warranty payable would be included in the operating expense section of the income statement.

Correct Answer
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General Stores borrowed $50 000 at 6% interest on a long- term loan payable on 31 August. At 31 December, interest plus $10 000 of the principal are payable within one year. What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Correct Answer
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Which of the following is associated with cash received in advance for services to be performed in the future?

Correct Answer
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C

Which of the following is a reason that many companies require a photo ID when employees pick up their pay cheques?

Correct Answer
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C

ABC signed a 5- year, 9% note payable for $80 000 on 1 May 2014. Which account will be credited when the note paid at maturity?

Correct Answer
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When the likelihood of an actual loss is probable, and the amount can be estimated, it should be recorded as an expense and as a liability.

Correct Answer
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On 20 June 2013, Parker Services received $2 400 in advance from a customer for one month's service. The journal entry to adjust the accounts at the end of June would be which of the following?

Correct Answer
verified

A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense.

Correct Answer
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Which of the following is a reason that many companies maintain two payroll bank accounts?

Correct Answer
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Which of the following is a liability, created when a company receives cash for services to be provided in the future?

Correct Answer
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Which of the following accounting principles requires that warranty expenses must be estimated and recognised in the same period as the related sales revenue is recognised?

Correct Answer
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A

Correct Answer
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Which of the following is a major control risk in the payroll area?

Correct Answer
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Which of the following is a characteristic of a current liability?

Correct Answer
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Exam 11: Current Liabilities and Payroll

Which of the following is pay stated as a percentage of a sale amount?

Correct AnswerverifiedShow Answer

Which of the following is pay over and above base salary, usually paid for exceptional performance?

Correct AnswerverifiedShow Answer

Employers must deduct income tax from an individual employee's earnings.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In which of the following periods should the estimated warranty liability be debited?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Estimated warranty payable would be included in the operating expense section of the income statement.

Correct AnswerverifiedShow Answer

General Stores borrowed $50 000 at 6% interest on a long- term loan payable on 31 August. At 31 December, interest plus $10 000 of the principal are payable within one year. What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?

Correct AnswerverifiedShow Answer

Which of the following is associated with cash received in advance for services to be performed in the future?

Correct AnswerverifiedC

Which of the following is a reason that many companies require a photo ID when employees pick up their pay cheques?

Correct AnswerverifiedC

ABC signed a 5- year, 9% note payable for $80 000 on 1 May 2014. Which account will be credited when the note paid at maturity?

Correct AnswerverifiedShow Answer

When the likelihood of an actual loss is probable, and the amount can be estimated, it should be recorded as an expense and as a liability.

Correct AnswerverifiedShow Answer

On 20 June 2013, Parker Services received $2 400 in advance from a customer for one month's service. The journal entry to adjust the accounts at the end of June would be which of the following?

Correct AnswerverifiedShow Answer

A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense.

Correct AnswerverifiedShow Answer

Which of the following is a reason that many companies maintain two payroll bank accounts?

Correct AnswerverifiedShow Answer

Which of the following is a liability, created when a company receives cash for services to be provided in the future?

Correct AnswerverifiedShow Answer

Which of the following accounting principles requires that warranty expenses must be estimated and recognised in the same period as the related sales revenue is recognised?

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

Which of the following is a major control risk in the payroll area?

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a current liability?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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C

Correct Answer
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C

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A

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