Chapter 11 Terms

Question 1

Bonus

Answer 1

Compensation to management and other personnel, based on factors such as increased sales or the amount of net income

Question 2

Contingent Liability

Answer 2

A potential liability that may become an actual liability in the future

Question 3

Current Ratio

Answer 3

A measure of a company’s liquidity; computed as current assets divided by current liabilities

Question 4

Defined-benefit Plan

Answer 4

A pension plan in which the benefits that the employee will receive at retirement are defined by the terms of the plan

Question 5

Defined-contribution Plan

Answer 5

A pension plan in which the employer’s contribution to the plan is defined by the terms of the plan

Question 6

Employee Earnings Record

Answer 6

A cumulative record of each employee’s gross earnings, deductions, and net pay during the year

Question 7

Employee’s Withholding Allowance Certificate (Form W-4)

Answer 7

A form that employee submit to their employers to indicate the number of allowances claimed

Question 8

Federal Unemployment Taxes

Answer 8

Taxes imposed on the employer by the federal government that provide benefits for a limited period to employees who lose their jobs through no fault of their own

Question 9

Fees

Answer 9

Payments made for the services of professionals

Question 10

FICA Taxes

Answer 10

Taxes designed to provide workers with supplemental retirement, employment disability, and medical benefits

Question 11

Gross Earnings

Answer 11

Total compensation earned by an employee

Question 12

Net Pay

Answer 12

Gross earnings less payroll deductions

Question 13

Notes Payable

Answer 13

Obligations in the form of written notes

Question 14

Payroll Deductions

Answer 14

Deductions from gross earnings to determine the amount of a paycheck

Question 15

Payroll Register

Answer 15

A payroll record that accumulates the gross earnings to determine the amount of a paycheck

Question 16

Pension Plan

Answer 16

An agreement whereby an employer provides benefits to the employees after they retire

Question 17

Post-retirement Benefits

Answer 17

Payments by employers to retired employees for healthcare, life insurance, and pensions

Question 18

Salaries

Answer 18

Employee pay based on a specified amount rather than an hourly rate

Question 19

Statement of Earnings

Answer 19

A document attached to a paycheck that indicates the employee’s gross earnings, payroll deductions, and net pay

Question 20

State Unemployment Taxes

Answer 20

Taxes imposed on the employer by states that provide benefits to employees who lose their job

Question 21

Wage and Tax Statement (Form W-2)

Answer 21

A form showing gross earnings, FICA taxes withheld, and income taxes withheld, prepared annually by an employer for each employee

Question 22

Wages

Answer 22

Amounts paid to employees based on a rate per hour or on a piecework basis

Question 23

Working Capital

Answer 23

A measure of a company’s liquidity; computed as current assets minus current liabilities