CHAPTER 11: CURRENT LIABILITIES AND PAYROLL
1. Receiving payment prior to delivering goods or services causes a current liability to be incurred.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. All long-term liabilities eventually become current liabilities.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. For a current liability to exist, the liability must be due usually within a year and must be paid out of current assets.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
4. The borrower issues a note payable to a creditor.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 11: Current Liabilities and Payroll
5. Notes payable may be issued to creditors to satisfy previously created accounts payable.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. Interest expense is reported in the operating expense section of the income statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. An interest-beating note is a loan in which the lender deducts interest from the amount loaned before the money
is advanced to the borrower.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. The amount borrowed is equal to the face amount of the note on an interest bearing note payable.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 11: Current Liabilities and Payroll
9. The amount of money a borrower receives from the lender is called the discount rate.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. The proceeds of a discounted note are equal to the face value of the note.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
11. The discount on a note payable is charged to an account that has a normal credit balance.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 11: Current Liabilities and Payroll
13. Amounts withheld from each employee for social security and Medicare vary by state.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
14. An employee's take-home pay is equal to gross pay less all voluntary deductions.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
15. Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee’s
federal income taxes.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. Receiving payment prior to delivering goods or services causes a current liability to be incurred.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. All long-term liabilities eventually become current liabilities.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. For a current liability to exist, the liability must be due usually within a year and must be paid out of current assets.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
4. The borrower issues a note payable to a creditor.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 11: Current Liabilities and Payroll
5. Notes payable may be issued to creditors to satisfy previously created accounts payable.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. Interest expense is reported in the operating expense section of the income statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. An interest-beating note is a loan in which the lender deducts interest from the amount loaned before the money
is advanced to the borrower.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. The amount borrowed is equal to the face amount of the note on an interest bearing note payable.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 11: Current Liabilities and Payroll
9. The amount of money a borrower receives from the lender is called the discount rate.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. The proceeds of a discounted note are equal to the face value of the note.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
11. The discount on a note payable is charged to an account that has a normal credit balance.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ACCT.WARD.16.11-01 - 11-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 11: Current Liabilities and Payroll
13. Amounts withheld from each employee for social security and Medicare vary by state.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.ACBSP.APC.16 - Current Liabilities Reporting
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
14. An employee's take-home pay is equal to gross pay less all voluntary deductions.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
15. Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee’s
federal income taxes.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.11-02 - 11-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.14 - Payroll/Other Compensation
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
