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Exam 11: Current Liabilities and Payroll Accounting

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Question 91

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The difference between the amount borrowed and the amount repaid is referred to as _____________.

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Question 92

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Halo Company provides you with following information for two of its employees. The company is subject to the following taxes. Compute amounts for each of these four taxes as applied to each employee's gross earnings for November.

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Question 93

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Employers' responsibilities for payroll include:

A note payable can be used to extend the payment due on an account payable.

When the number of withholding allowances claimed on Form W-4 increases, the amount of income tax withheld increases.

If the times interest ratio:

A high value for the times interest earned ratio means that a company is a higher risk borrower.

Each employee records the number of withholding allowances claimed on form W-4, which is the withholding allowance certificate that is filed with the employer.

A company's income before interest expense and income taxes in 2010 and 2011 is $395,000 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

A payroll register is a cumulative record of an employee's hours worked, gross earnings, deductions, and net pay.

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

Since income tax expense is created by earning income, a liability is incurred when income is earned.

______________ are amounts owed to suppliers for products or services purchased on credit.

Maryland Company offers a bonus plan to its employees equal to 3% of net income. Maryland's net income is expected to be $960,000. The amount of the employee bonus expense is estimated to be

A company's employer payroll tax rates are 0.8% for federal unemployment taxes, 5.4% for state unemployment taxes, 6.2% for FICA social security taxes on earnings up to $106,800, and 1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement information required below for the following employees:

A contingent liability is a potential obligation that depends on a future event arising from a future transaction or event.

A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

A _______________________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.

The Federal Insurance Contributions Act (FICA) requires that each employer file a: