Chapter 10 Terms

Question 1

Accounts payable

Answer 1

Money owed that results from purchase transactions with suppliers. Also known as trade payables.

Question 2

Breakage

Answer 2

Money paid by a customer for a gift card but never redeemed.

Question 3

Canada Pension Plan (CPP)

Answer 3

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

Question 4

Collateral

Answer 4

Property pledged as security for a loan.

Question 5

Contingency

Answer 5

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.

Question 6

Contingent liability

Answer 6

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

Question 7

Customer loyalty programs

Answer 7

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

Question 8

Determinable liability

Answer 8

A liability whose existence, amount, and timing are known with certainty.

Question 9

Employee benefits

Answer 9

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

Question 10

Employee earnings record

Answer 10

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

Question 11

Employment Insurance (EI)

Answer 11

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.

Question 12

Gross pay

Answer 12

Total compensation earned by an employee. Also known as gross earnings.

Question 13

Insurable earnings

Answer 13

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

Question 14

Net pay

Answer 14

Gross pay less payroll deductions.

Question 15

Notes payable

Answer 15

Obligations in the form of written promissory notes.

Question 16

Operating line of credit

Answer 16

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

Question 17

Payroll deductions

Answer 17

Deductions from gross pay to determine the amount of a paycheque.

Question 18

Payroll register

Answer 18

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.

Question 19

Pensionable earnings

Answer 19

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

Question 20

Personal tax credits

Answer 20

Amounts deducted from an individual’s income taxes determine the amount of income taxes to be withheld.

Question 21

Prime rate

Answer 21

The interest rate banks charge their best customers.

Question 22

Product warranties

Answer 22

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

Question 23

Provisions

Answer 23

Liabilities of uncertain timing or amount. Also known as estimated liabilities.