Ch 10 Current Liabilities and Payroll

Question 1

accounts payable

Answer 1

Accounts payable that result from purchase transactions with supplies. Also known as trade payables. (p. 530)

Question 2

Canada Pension Plan (CPP)

Answer 2

A mandatory federal plan that gives disability, retirement, and death benefits to qualifying Canadians. (p. 543)

Question 3

collateral

Answer 3

Property pledged as security for a loan. (p. 531)

Question 4

contingency

Answer 4

An existing condition or situation that is uncertain, where it cannot be known if a loss (and a related liability) will result from the situation until one or more future events happen or do not happen. (p. 540)

Question 5

contingent liability

Answer 5

A liability whose existence will be confirmed only by the occurrence or non-occurrence of a future event. (p. 540)

Question 6

customer loyalty programs

Answer 6

Programs that result in future savings for members on the merchandise or services the company sells (p. 537)

Question 7

determinable liability

Answer 7

A liability whose existence, amount, and timing are known with certainty. (p. 530)

Question 8

employee benefits

Answer 8

Payments made by an employer, in addition to wages and salaries, to give pension, insurance, medical, or other benefits to its employees. (p. 544)

Question 9

employee earnings record

Answer 9

A separate record of an employee’s gross pay, payroll deductions, and net pay for the calendar year. (p. 545)

Question 10

Employment Insurance (EI)

Answer 10

A federal mandatory insurance program designed to give income protection for a limited period of time to employees who are temporarily laid off, who are on parental leave, or who lose their jobs. (p. 543)

Question 11

gross pay

Answer 11

Total compensation earned by an employee. Also known as gross earnings. (p. 542)

Question 12

insurable earnings

Answer 12

Gross earnings used to calculate EI deductions. There is a maximum amount of insurable earnings set each year by the government. (p. 552)

Question 13

net pay

Answer 13

Gross pay less payroll deductions. (p. 544)

Question 14

notes payable

Answer 14

Obligations in the form of written promissory notes. (p. 532)

Question 15

operating line of credit

Answer 15

Pre-authorized approval to borrow money at a bank when it is needed, up to a pre-set limit. (p. 531)

Question 16

payroll deductions

Answer 16

Deductions from gross pay to determine the amount of a paycheque. (p. 543)

Question 17

payroll register

Answer 17

A record that accumulates the gross pay, deductions, and net pay per employee for each pay period and becomes the documentation for preparing a paycheque for each employee. (p. 546)

Question 18

pensionable earnings

Answer 18

Gross earnings less the basic yearly exemption. There is a maximum amount of pensionable earnings set each year by the government. (p. 551)

Question 19

personal tax credits

Answer 19

Amounts deducted from an individual’s income taxes that determine the amount of income taxes to be withheld. (p. 553)

Question 20

prime rate

Answer 20

The interest rate banks charge their best customers. (p. 532)

Question 21

product warranties

Answer 21

Promises made by the seller to a buyer to repair or replace a product if it is defective or does not perform as intended. (p. 536)

Question 22

provisions

Answer 22

Liabilities of uncertain timing or amount. Also known as “estimated liabilities.” (p. 536)