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Exam 11: Current Liabilities and Payroll Accounting

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Question 81

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All of the following statements related to current liabilities for U.S. GAAP and IFRS are true except:

A) The definitions and characteristics of current liabilities are broadly similar for both U.S. GAAP and IFRS.
B) Because tax regulatory systems of countries are different, the approach to recording taxes is totally different.
C) The term provision is typically used under IFRS to refer to what is titled liability under U.S. GAAP.
D) When there is little uncertainty surrounding current liabilities, both require companies to record them in a similar manner.
E) When there is a known current obligation that involves an uncertain amount, but one that can be reasonable estimated, both require similar treatment.

F) A) and C)
G) B) and D)

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Question 82

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All of the following statements regarding long-term liabilities are true except?

A) Liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities.
B) Long-term liabilities can be reported on the balance sheet in a single total or in multiple categories.
C) Long-term liabilities include long-term notes payable, warranty liabilities, lease liabilities, and bonds payable.
D) A single long-term liability can be divided between current and noncurrent sections on the balance sheet.
E) Liabilities not expected to be paid within the longer of one year or the company's operating cycle are reported as long-term liabilities.

F) C) and D)
G) C) and E)

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Question 83

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Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. What is the total amount of taxes withheld from the Portia's earnings? (Round your intermediate calculations to two decimal places.)

Times interest earned is calculated by:

Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000. The journal entry to recognize the potential loss is:

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

Interest expense is not:

A company's income before interest expense and income taxes in 2014 and 2015 is $225,000 and $250,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

A single liability cannot be divided between current and noncurrent liabilities.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

What are known current liabilities? Cite at least two examples of known current liabilities.

All of the following statements related to recording warranty expense are true except:

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

An employer's federal unemployment taxes (FUTA) are reported:

Describe employer responsibilities for reporting payroll taxes. (To the extent possible, reference the form to be filed for each tax.)

Athena Company's salaried employees earn two weeks of vacation per year. It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50. Record Athena Company's weekly journal entry to record the vacation expense:

The annual Federal Unemployment Tax Return is:

Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July?

The rate that a state assigns reflecting a company's stability or instability in employing workers is the: