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Exam 8: Current Liabilities

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Question 71

Multiple Choice

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Which of the following is not withheld from an employee's salary?

A) FICA taxes.
B) Federal and state unemployment taxes.
C) Federal and state income taxes.

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Question 72

Multiple Choice

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The Pita Pit borrowed $100,000 on November 1,2018,and signed a six-month note bearing interest at 12%.Principal and interest are payable in full at maturity on May 1,2019.In connection with this note,The Pita Pit should report interest expense at December 31,2018,in the amount of:

A) $0.
B) $1,000.
C) $2,000.

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Question 73

Multiple Choice

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Which of the following is not a characteristic of a liability?

Which of the following measures of liquidity does not control for the relative size of the company?

When a company collects sales taxes,the debit is to Cash and the credit is to Sales Tax Payable.

A contingent liability is recorded only if a loss is at least reasonably possible and the amount is reasonably estimable.A contingent liability is recorded only if a loss is probable and the amount is reasonably estimable.

Which of the following are withheld from an employee's salary? I.FICA taxes.II.Federal and state unemployment taxes.III.Federal and state income taxes.IV.Employee portion of health insurance.

A contingent liability is an existing,uncertain situation that might result in a loss.

Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month) .Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum.Assuming the Social Security maximum base amount is $118,500,how much will be withheld during the year for Greger's Social Security and Medicare.

Footnote disclosure is required for material potential losses when the loss is at least reasonably possible:

Unified Airlines is being sued by Northeast Airlines for $5,000,000.At the end of the year,Unified feels it is reasonably possible that it will pay $5,000,000 at some point in the following year.What should Unified and Northeast record at the end of the year concerning the lawsuit?

Strikers,Inc.sells soccer goals to customers over the Internet.History has shown that 2% of Strikers' goals will need repair under the warranty program.For the year,Strikers has sold 4,000 goals and 45 have been repaired.If the estimated cost to repair a goal is $200,what would be the warranty liability at the end of the year?

A gain contingency is an existing uncertain situation that might result in a gain,which often is the flip side of loss contingencies.

When a company collects sales tax from a customer,the event is recorded by:

In most cases,current liabilities are payable within ____ year(s) ,and long-term liabilities are payable more than ____ year(s) from now.

We record gain contingencies when the gain is probable and the amount is reasonably estimable.We do not record gain contingencies until the gain is certain.

Liabilities are defined as:

A contingent liability should be recorded on a company's financial statements only if the likelihood of a loss occurring is:

Young Company is involved in a lawsuit.The liability that could arise as a result of this lawsuit should be recorded on the books if the probability of Young owing money as a result of the lawsuit is:

Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour.Federal income taxes are withheld at 15% and state income taxes at 6%.FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee.What is the actual direct deposit of payroll for the first week of January?