Chapter 12 Flashcards
accounts payable
Amounts due to suppliers relating to the purchase of goods and services on credit.
compensated absences
Term to describe paid time off; vacations, sick leave, etc.
contingent liabilities
Events that may or may not give rise to an actual liability because the outcome is uncertain; examples include lawsuits, environmental damage issues, and so forth.
defined benefit plan
A type of pension plan where the benefits are a function of years of service, pay, and age; the ultimate employer cost is not know in advance.
defined contribution plan
A type of pension plan where the benefits are based on amounts in trust for the benefit of the employee; employer contributions are usually a fixed percentage of pay.
employee
A person who works for a specific business and whose activities are directed by that business.
FICA
Federal Insurance Contributions Act (also know as social security and Medicare); establishes a tax that employers must withhold and match for government-based retiree benefit.
Form 1099
A form required to be issued to an independent contractor reporting amount paid; to assist with tax compliance issues (this form used to report other payments like interest, etc.)
FUTA
Federal Unemployment Tax levied on employer to provide funds for unemployed worker; rate is dependent on existence of SUTA and employer history of layoffs, etc.
gross pay
Also know as gross earnings; this is the total amount earned by an employee before any deductions.
income taxes
Taxes that are based on the amount income; for employees such amounts must be withheld by employers and remitted to the government.
independent contractor
One who performs a designated task or service for a company, and the company has the right to control or direct only the result of the work done.
net pay
Also know as net earning; this is the gross pay less all applicable deductions (“take home pay”).
notes payable
Formal short-term borrowings usually evidenced by a specific written promise to pay.
pension plan
A general term to describe some form of arrangement for continuing payments to retirees.
SUTA
Stat Unemployment Tax levied on employer to provide funds for unemployed workers; rate is adjusted for employer history of layoffs, etc.
W-2
An annual statement provided to employees stating the amount of earnings and withholdings; assists employee in preparing their own tax returns.
W-4
A form filled out by an employee stating the amount of exemptions to which they are entitled for tax purposes; such exemptions bear on the amount of income tax withholdings.
warranty liability
A liability that is recorded for the future costs of claims that are anticipated because of product warranty agreements.
workers compensation insurance
Insurance paid by the employer to cover work related injuries sustained by employees.
