ACTG 210 Chapter 10
Test With Solution
Current liability - ANSWER a debt that a company expects to pay:
1. from existing current assets or through the creation of other current
liabilities and
2. within one year or the operating cycle, whichever is longer
what do current liabilities include? - ANSWER notes payable, unearned
revenues, accrued liabilities such as taxes, salaries and wages, and interest
to be classified as a current liability a debt must be expected to be paid
within:
a. 1 year
b. the operating cycle
c. 2 years
d. a or b, whichever is longer - ANSWER D
what are notes payable? - ANSWER -written promissory note
-usually require the borrower to pay interest
-frequently issued to meet short-term financing needs
-issued for varying periods of time
, -those due for payment within one year of the balance sheet date are usually
classified as current liabilities
how are sales taxes expressed? - ANSWER as stated percentage of the sales
price
unearned revenues - ANSWER revenues that are received before goods are
delivered or services are performed
current maturities of long-term debt - ANSWER -portion of long-term debt
that comes due in the current year
-no adjusting entry required
payroll salaries - ANSWER managerial, administrative, and sales personnel
payroll wages - ANSWER store clerks, factory employees, manual laborers
(rate per hour)
how is payroll determined? - ANSWER 1. gross earnings
2. payroll deductions
3. net pay
payroll expenses - ANSWER results from three taxes that governmental
agencies levy on employers:
1. FICA tax
2. Federal unemployment tax
3. state unemployment tax
Test With Solution
Current liability - ANSWER a debt that a company expects to pay:
1. from existing current assets or through the creation of other current
liabilities and
2. within one year or the operating cycle, whichever is longer
what do current liabilities include? - ANSWER notes payable, unearned
revenues, accrued liabilities such as taxes, salaries and wages, and interest
to be classified as a current liability a debt must be expected to be paid
within:
a. 1 year
b. the operating cycle
c. 2 years
d. a or b, whichever is longer - ANSWER D
what are notes payable? - ANSWER -written promissory note
-usually require the borrower to pay interest
-frequently issued to meet short-term financing needs
-issued for varying periods of time
, -those due for payment within one year of the balance sheet date are usually
classified as current liabilities
how are sales taxes expressed? - ANSWER as stated percentage of the sales
price
unearned revenues - ANSWER revenues that are received before goods are
delivered or services are performed
current maturities of long-term debt - ANSWER -portion of long-term debt
that comes due in the current year
-no adjusting entry required
payroll salaries - ANSWER managerial, administrative, and sales personnel
payroll wages - ANSWER store clerks, factory employees, manual laborers
(rate per hour)
how is payroll determined? - ANSWER 1. gross earnings
2. payroll deductions
3. net pay
payroll expenses - ANSWER results from three taxes that governmental
agencies levy on employers:
1. FICA tax
2. Federal unemployment tax
3. state unemployment tax
