Chapter 11

Question 1

liabilities

Answer 1

money owed to creditors

Question 2

current liabilities

Answer 2

payable within 1 year

Question 3

long term liability

Answer 3

paid back over a longer period such as a mortgage

Question 4

Accounts Payable

Answer 4

amounts owed for purchases on acct

Question 5

Sales Tax Payable

Answer 5

collect tax from customer and pay to state later

cash $$

sales revenue $$

Sales tax payable $$

Question 6

unearned revenues

Answer 6

deferred revenues, recorded when revenue is earned.

rcv cash in advance

Question 7

short term notes payable

Answer 7

written promise to pay a debt with interest 1 yr or less

Question 8

current portion of long term liabilities

Answer 8

the current period’s portion of long term liabilities.

Question 9

Payroll Liability

Answer 9

amounts to pay employees wages, salaries, commissions, bonuses, and benefits

Question 10

wages

Answer 10

base rate /hour

Question 11

overtime

Answer 11

a special rate for extra hours

Question 12

gross pay

Answer 12

amount paid before taxes and deductions

total expense to business

Question 13

net pay

Answer 13

take home pay for employee

Question 14

witholding deductions

Answer 14

taxes, insurance, 401K, charitable giving, employee loans

Question 15

required deductions

Answer 15

Fit
sit

sst

Question 16

optional deductions

Answer 16

insurance

retirement

Question 17

witholding deductions are a

Answer 17

liability for companies

Question 18

income tax witholding

Answer 18

tax deducted from gross pay

based on gross pay, allowance, and w4 allowance

Question 19

FICA

Answer 19

Federal insurance contribution tax

social security tax

Question 20

fica

Answer 20

employer & employee matched

Question 21

OASDI

Answer 21

Fica component

Old age Survivorsm and disability insurance

taxed on 1st 118,500 @ 6.2 %

Question 22

Medicare

Answer 22

Medical benefits for senior citizens

1. 45% up to 200k
2. 35% over 200K

Question 23

Payroll Register

Answer 23

a schedule that summarizes the earnings, withholdings, and net pay for each employee

Question 24

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Answer 24

Payroll Journal Entry

Question 25

Payday journal entry

Answer 25

Salaries payable $$ | Cash

Question 26

employer payroll taxes

Answer 26

Employer Fica | matches employee

Question 27

unemployment compensation tax

Answer 27

paid by employer to govt on first 7000 per employe

Question 28

SUTA

Answer 28

State unemployment taxes 5.4% (varies by state) on first 7k annual earnings

Question 29

FUTA

Answer 29

Federal Unemployment Tax Act .6% on first 7k annual earnings

Question 30

journal entry for employer payroll taxes

Answer 30

Payroll liabilities     cash compound entry

Question 31

controls for efficiency

Answer 31

using software to speed up process, calculations are automatic, prints payroll checks

Question 32

controls to safegaurd disbursements

Answer 32

photo ID, clock in times, sepration of duties (HR/Payroll/Acctg) treasurer to disburse

Question 33

Bonus Pay Plans

Answer 33

Provide one-time payments based on performance accomplishments

Question 34

estimating bonus liabilities

Answer 34

bonus=(bonus% * net income before bonus)/(1+bonus %)

Question 35

estimating liabilities

Answer 35

based off history, average industry standards

Question 36

warranty

Answer 36

an agreement that guarantees a company's product against defects

Question 37

warranty expense

Answer 37

recorded in the same period as the sale

Question 38

Warranty journal entry

Answer 38

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Question 39

honor a warranty journal entry

Answer 39

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Question 40

contingent liabilities

Answer 40

potential liabilities that depend on a future event lawsuits for example

Question 41

cosigning a note payable

Answer 41

creates a contingent liability based on the other party paying the note payable

Question 42

recording contingent liabilities

Answer 42

remote chance - very little chance - no liability recorded - no disclosure reasonable chance - 50/50 chance - no liability recorded - disclose on statements probable chance - likely - liability recorded - liability added to statements

Question 43

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Answer 43

contingent liability table

Question 44

times interest earned ratio

Answer 44

evaluates a business' ability to pay interest expense measures # of times earnings before interest and taxes can pay for interest expense higher is better = (net income+income tax expense+interest expense)/ interest expense