Accounting – Chapters 7-13

question

T/F: The balance of the Merchandise Inventory account that appears in the Trial Balance section of the worksheet represents the stock of goods on hand at the beginning of the current period.
answer

True
question

An adjusting entry is usually not required for a revenue item when it is A. budgeted, paid for, and partially earned in one period but not fully earned until a later period. B. paid for by the customer, recorded, and earned in one period. C. paid for by the customer and recorded in one period but not fully earned until a later period D. earned in one period but not paid for by the customer or recorded until a later period.
answer

B
question

If an account has a debit balance of $700 in the Trial Balance section of a worksheet and there is a debit entry of $200 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a A. $900 debit B. $500 debit C. $500 credit D. $900 credit
answer

A
question

On May 1, 2014, a firm purchased a 1-year insurance policy for $3,600 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 2014, is A. $3,600 B. $2,400 C. $2,100 D. $1,200
answer

B
question

Allowance for Doubtful Accounts is reported in the A. Assets section of the balance sheet B. Operating Expenses section of the income statement. C. Liabilities section of the balance sheet. D. Cost of Goods Sold section of the income statement
answer

A
question

Hugh Morris Company pays weekly wages of $10,000 every Friday for a five day week ending on that day. If the last day of the year is on Wednesday, the adjusting entry to record the accrued wages is: A. debit Wages Expense $6,000; credit Cash $6,000 B. debit Wages Expense $4,000; credit Cash $4,000 C. debit Wages Expense $6,000; credit Wages Payable $6,000 D. debit Wages Expense $6,000; credit Drawing $6,000
answer

C
question

If an account has a debit balance of $700 in the Trial Balance section of a worksheet and there is a credit entry of $200 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a A. $900 debit B. $500 debit C. $500 credit D. $900 credit
answer

B
question

T/F: Under the accrual basis of accounting, the expense for uncollectible accounts is estimated and recorded before specific accounts are actually written off.
answer

True
question

After both of the entries for the inventory adjustment have been posted the debit in the Income Summary account represents: A. Net Income B. Ending Inventory C. Beginning Inventory D. Cost of Goods Sold
answer

C
question

Purchases of merchandise are A. debited to Merchandise Inventory B. credited to Merchandise Inventory C. debited to Purchases D. credited to Sales
answer

C
question

On January 2, 2014, a firm purchased equipment for $8,500. Depreciation expense for the year ending December 31, 2014, given the straight-line method, a 5-year useful life, and a salvage value of $1,500, is A. $1,500 B. $1,700 C. $1,200 D. $1,400
answer

D
question

T/F: The objective of matching revenues and expenses to specific fiscal periods is most nearly attained when revenues and expenses are recognized in the period during which cash related to the transactions is received or paid.
answer

False
question

The adjusting entry to record accrued interest on a note payable requires a debit to A. Interest Income and a credit to Notes Payable B. Interest Payable and a credit to Interest Expense C. Interest Expense and a credit to Cash. D. Interest Expense and a credit to Interest Payable
answer

D
question

T/F: The debit and credit amounts for the Income Summary account are combined into one number in the Income Statement section of the worksheet.
answer

False
question

Accrued expenses are A. paid for in one period but not fully used until a later period B. used in one period but not paid for until a later period. C. paid for, recorded, and used in one period D. budgeted but not paid for or used during the period
answer

B
question

T/F: When the accrual basis of accounting is used, expenses are recognized only in the period during which they are paid.
answer

False
question

If an account has a credit balance of $700 in the Trial Balance section of a worksheet and there is a credit entry of $200 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is A. $900 debit B. $500 debit C. $500 credit D. $900 credit
answer

D
question

The Supplies account has a trial balance of $3,136. A year-end inventory shows $1,734 worth of supplies left at the end of the year. The correct adjusting entry is: A. debit Supplies Expense $1,734; credit Prepaid Supplies $1,734 B. debit Supplies $1,402; credit Supplies Expense $1,402 C. debit Supplies Expense $3,136; credit Supplies $3,136 D. debit Supplies Expense $1,402; credit Supplies $1,402
answer

D
question

Which of the following is a common example of the distribution channel? A. Manufacturer sells to Customer who sells to Wholesaler who sells to Retailer B. Manufacturer sells to Wholesaler who sells to Retailer who sells to Customer C. Manufacturer sells to Retailer who sells to Wholesaler who sells to Customer D. Customer sells to Wholesaler who sells to Retailer who sells to Wholesaler
answer

B
question

The entry to record the return of merchandise from a customer on which sales tax was charged includes A. a debit to Accounts Receivable B. a credit to Sales Tax Payable C. a credit to Sales Returns and Allowances D. a debit to Sales Tax Payable
answer

D
question

The amount of the trade discount taken by the customer is recorded as A. an expense B. revenue C. a liability D. trade discounts are not recorded
answer

D
question

Hugh Snow, the buyer, returned merchandise to Farley Co., the seller. The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a: A. Debit Accounts Payable B. Credit to Purchase Returns and Allowances C. Debit to Accounts Receivable D. Debit Sales Returns and Allowances
answer

D
question

T/F: The amount of sales tax due is required to be paid just once per year, at the end of the year, for all companies.
answer

False
question

All of the following are examples of sales slips used in credit card transactions except A. sales invoices B. sales drafts C. sales vouchers D. sales receipts
answer

D
question

If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were A. $54,000 B. $50,000 C. $46,000 D. $4,000
answer

question

T/F: After all the transactions have been posted, the totals of the balances in the accounts receivable subsidiary ledgers should equal the balance of the Accounts Receivable account in the general ledger.
answer

True
question

A wholesale business sells goods with a list price of $900 and a trade discount of 40 percent. The net price is A. $360.00 B. $540.00 C. $900.00 D. $940.00
answer

B
question

Kay Sadia sold merchandise for $8,750 subject to a 6% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for A. $9,275.00 B. $8,225.00 C. $8,750.00 D. $8,462.00
answer

A
question

T/F: The list price is also known as the established retail price.
answer

True
question

A credit policy that is too lenient results in A. increased sales volume accompanied by a low level of losses. B. decreased sales volume accompanied by a low level of losses. C. increased sales volume accompanied by a high level of losses. D. decreased sales volume accompanied by a high level of losses
answer

C
question

T/F: The Sales Returns and Allowances account has a normal debit balance.
answer

True
question

The Sales Returns and Allowances account is classified as A. an asset account B. a contra asset account C. a revenue account D. a contra revenue account
answer

D
question

Which of the following is not one of the three basic types of business? A. Service B. Merchandising C. Wholesale D. Manufacturing
answer

C
question

Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a credit to Sales for A. $2,250.00 B. $2,092.50 C. $2,452.50 D. $2,362.00
answer

A
question

All of the following are examples of the most common types of credit sales, except A. closed-account credit cards B. business credit cards C. bank credit cards D. cards issued by credit card companies
answer

A
question

Which of the following describes Sales Returns and Allowances? A. A revenue account with a normal credit balance. B. An expense account with a normal debit balance. C. A contra revenue account with a normal debit balance. D. A contra expense account with a normal credit balance.
answer

C
question

T/F: The amount of sales tax due is required to be paid just once per year, at the end of the year, for all companies.
answer

False
question

T/F: The balance of a customer’s account in the accounts receivable ledger is circled to show that it is a debit amount.
answer

False
question

T/F: When a customer pays within a certain time, he is eligible to receive a trade discount.
answer

False
question

Sales Returns and Allowances have the effect of A. decreasing total revenue B. increasing total revenue C. increasing expenses D. increasing assets
answer

A
question

T/F: A merchandising business sells goods that it produces.
answer

False
question

A firm that sells goods that it purchases for re-sale is a A. service business B. merchandising business C. manufacturing business D. non-profit business
answer

B
question

The objective of internal control of purchases is to A. create written proof that purchases and payments are authorized. B. create a disciplined work environment C. make the sales process more complex. D. create more organized invoices.
answer

A
question

To record a return of merchandise purchased on credit, the accountant would A. debit Purchases Returns and Allowances and credit Accounts Receivable B. debit Purchases Returns and Allowances and credit Purchases C. debit Accounts Payable and credit Purchases Returns and Allowances D. debit Purchases and credit Purchases Returns and Allowances
answer

C
question

T/F: When an accounts payable subsidiary ledger is used, the entry to Accounts Payable requires two posting references in the general journal.
answer

True
question

T/F: Purchase discounts is a contra expense account and has a normal credit balance.
answer

True
question

Which of the following statements is correct? A. Purchases should be made only after proper authorization has been given in writing. B. The person who ordered the goods should also authorize payment. C. Computations on an invoice are assumed to be correct if computer generated. D. Purchase requisitions do not need to be printed on pre-numbered forms.
answer

A
question

Credit terms of 2/10, n/45 mean A. payment in full is due 2 days after date of the invoice. B. if the invoice is paid within 10 days of its date, a 2% discount may be taken; otherwise the total amount is due in 45 days C. if the invoice is paid within 10 days of its date, a 2% discount may be taken; otherwise the total amount is due in 35 days. D. only that payment in full is due 45 days after date of the invoice
answer

B
question

When merchandise is needed, the purchasing department issues a form called A. a purchase invoice B. a purchase order C. a sale invoice D. a purchase requisition
answer

B
question

The Purchases account is A. a permanent account B. a temporary account C. a subsidiary account D. a liability account
answer

B
question

Purchases is a temporary _______ account. A. liability B. asset C. revenue D. expense
answer

D
question

T/F: If a business uses pre-numbered purchase orders, it is not necessary to account for every purchase order.
answer

False
question

T/F: When a sales department needs goods, it sends the purchasing department a purchase invoice.
answer

False
question

The amount of the purchases for a period is presented in A. the Liabilities section of the balance sheet B. the Revenue section of the income statement C. the Cost of Goods Sold section of the income statement D. the Expenses section of the income statement
answer

C
question

Credit terms of 1/10, n/30 mean A. only that payment in full is due 10 days after date of the invoice B. only that payment in full is due 30 days after date of the invoice C. if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 20 days D. if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days
answer

D
question

Which of the following is correct? A. Purchases Discounts is a contra expense account and carries a credit balance B. Purchases Discounts is an expense account and carries a debit balance C. Purchases Discounts is an asset account and carries a credit balance D. Purchases Discounts is an expense account and carries a credit balance
answer

A
question

Freight – In is a(n) ___________ account. A. revenue B. expense C. asset D. liability
answer

B
question

Freight charges on merchandise purchases should be debited to A. the Purchases account. B. the Accounts Payable account. C. the Freight In account. D. the Creditor’s account in the subsidiary ledger.
answer

C
question

T/F: If an amount recorded in the general journal requires two postings, a diagonal line is used to separate the two posting references.
answer

True
question

A firm had purchases of $16,200, freight charges of $300, and purchases returns and allowances of $1,100 during one month. Its net delivered cost of purchases was A. $14,800 B. $17,600 C. $16,200 D. $15,400
answer

D
question

The amount of the purchases for a period is presented in A. the Liabilities section of the balance sheet B. the Revenue section of the income statement C. The Cost of Goods Sold section of the income statement D. the Expenses section of the income statement
answer

C
question

T/F: A purchase allowance is when a business returns the goods.
answer

False
question

The objective of internal control of purchases is to A. create written proof that purchases and payments are authorized B. create a disciplined work environment C. make the sales process more complex D. create more organized invoices
answer

A
question

The total of the balances in the creditor’s accounts should agree with the balance of A. the Purchases account in the general ledger B. the Accounts Receivable account in the general ledger C. the Accounts Payable account in the general ledger D. the Sales account in the general ledger
answer

C
question

If a business pays $1,100 on account to a creditor, the effect of the payment is a decrease to cash and a(n) A. decrease to Fees Income B. increase of capital C. increase to accounts receivable D. decrease to accounts payable
answer

D
question

During the year, a firm purchased $256,200 of merchandise and paid freight charges of $41,720. If the total purchases returns and allowances were $15,790 and purchase discounts were $8,250 for the year, what is the net delivered cost of purchases? A. $297,920 B. $273,880 C. $321,960 D. $190,440
answer

B
question

The total of the individual creditor accounts in the subsidiary ledger must ________ the balance of the Accounts Payable control account. A. be greater than B. be less than C. be equal to D. be subtracted from
answer

C
question

A firm appropriately wrote a check for $78 but entered the amount as payment of $87 in its records. On a bank reconciliation statement this error would be shown as A. a deduction of $9 from the book balance B. an addition of $9 to the book balance C. a deduction of $9 from the bank statement balance. D. an addition of $9 to the bank statement balance.
answer

B
question

On a bank reconciliation statement, you would find all of the following except A. a list of canceled checks. B. a list of NSF checks. C. a list of outstanding checks. D. the bank service charge.
answer

A
question

A check issued for $1,980 to pay a vendor on account was recorded in the firm’s records as $1,890; the canceled check was properly listed on the bank statement at $1,980. To arrive at an accurate balance on a bank reconciliation statement, the error should be A. added to the bank statement balance. B. added to the book balance. C. deducted from the bank statement balance. D. deducted form the book balance.
answer

D
question

T/F: Cash Short or over is an expense account when it has a debit balance.
answer

True
question

T/F: A strong system of internal control requires that all payments be made by check except those made from a carefully controlled cash fund such as a petty cash fund.
answer

True
question

The entry to replenish a petty cash fund includes A. a debit to Cash and a credit to Petty Cash. B. a debit to Petty Cash Fund and a credit to Cash. C. debits to various expense accounts and a credit to Petty Cash Fund. D. debit to various expense accounts and a credit to Cash.
answer

D
question

T/F: To arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct an NSF check from the bank statement balance.
answer

False
question

T/F: The safest endorsement on a check is a full endorsement.
answer

False
question

To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be A. added to the bank statement balance. B. added to the book balance. C. deducted from the bank statement balance. D. deducted from the book balance.
answer

C
question

To arrive at an accurate balance on a bank reconciliation statement, a service charge should be A. added to the bank statement balance. B. added to the book balance. C. deducted from the bank statement balance. D. deducted from the book balance.
answer

D
question

Which of the following accounts will appear on the postclosing trial balance? A. Miscellaneous Income B. Payroll Taxes Expense C. Medicare Tax Payable D. Sales
answer

C
question

T/F: After all adjusting entries are posted, the balances of the general ledger accounts should match the amounts shown in the Adjusted Trial Balance section of the worksheet.
answer

True
question

T/F: After all adjusting entries are posted, the balances of the general ledger accounts should match the amounts shown in the Adjusted Trial Balance section of the worksheet.
answer

False
question

T/F: Current assets are usually listed on a balance sheet in order of liquidity.
answer

True
question

Which of the following would not be classified as a Current Asset? A. Equipment B. Supplies C. Accounts Receivable D. Cash
answer

A
question

Cost of Goods Sold is classified as a(n) A. Revenue account B. Asset account C. Expense account D. Owner’s Equity account
answer

C
question

The beginning capital balance shown on a statement of owner’s equity is $86,000. Net income for the period is $36,000. The owner withdrew $44,000 cash from the business and made no additional investments during the period. The owner’s capital balance at the end of the period is A. $78,000 B. $94,000 C. $122,000 D. $166,000
answer

A
question

At the end of the year Stan Still Stationery Store had the following balances: Sales $580,000; Sales Discounts $2,540; Sales Returns and Allowances $14,280; Sales Salaries Expense $60,000. The Net Sales for the year are: A. $565,720 B. $577,460 C. $563,180 D. $503,180
answer

C
question

The beginning capital balance shown on a statement of owner’s equity is $100,000. Net income for the period is $50,000. The owner withdrew $25,000 cash from the business and made no additional investments during the period. The owner’s capital balance at the end of the period is A. $175,000 B. $150,000 C. $125,000 D. $100,000
answer

C
question

Gross profit on sales is calculated by subtracting A. sales returns and allowances from sales B. cost of goods sold from net sales C. ending inventory from the total merchandise available for sale D. total expenses from sales
answer

B
question

Which of the following accounts is not closed? A. Capital B. Depreciation Expense C. Sales D. Purchase Discounts
answer

A
question

The beginning capital balance shown on a statement of owner’s equity is $43,000. Net income for the period is $18,000. The owner withdrew $22,000 cash from the business and made no additional investments during the period. The owner’s capital balance at the end of the period is A. $39,000 B. $47,000 C. $61,000 D. $83,000
answer

A
question

Which of the following accounts is not closed? A. Sales B. Accounts Receivable C. Depreciation Expense D. Purchases
answer

B
question

Prepaid expenses appear in the A. Operating Expenses section of the income statement B. Other Expenses section of the income statement C. Current Assets section of the balance sheet D. Current Liabilities section of the balance sheet
answer

C
question

The entry to reverse the adjusting entry for accrued payroll taxes expense includes A. a debit to Payroll Taxes Expense B. a debit to Employee Income Tax Payable C. a credit to Social Security Tax Payable and a credit to Medicare Tax Payable D. a debit to Social Security Tax Payable and a debit to Medicare Tax Payable
answer

D
question

In the general journal, reversing entries are dated as of A. the last day of the old fiscal period B. the first day of the new fiscal period C. any day during the month of the new fiscal period D. any time before the end of the fiscal period
answer

B
question

The current ratio is calculated by A. dividing current assets by current liabilities B. dividing current liabilities by current assets C. dividing total assets by total current assets D. dividing current assets by total assets
answer

A
question

T/F: Current assets provide the funds needed to pay bills and meet expenses.
answer

True
question

T/F: After all adjusting entries are posted, the balances of the general ledger accounts should match the amounts shown in the Adjusted Trial Balance section of the worksheet.
answer

True
question

Which of the following statements is correct? A. The term single-step income statement is sometimes used to describe a classified income statement. B. If a business is to earn a net income, the gross profit on sales must be greater than operating expenses. C. Salaries of office employees would be grouped with the selling expenses in the Operating Expenses section of the income statement D. All of the above statements are correct.
answer

B
question

Interest Expense is classified as a(n): A. Administrative Expense B. Selling Expense C. Other Income D. Other Expense
answer

D
question

The entry to reverse the adjustment for accrued interest income consists of a debit to A. Interest Income and a credit to Income Summary B. Interest Income and a credit to Interest Receivable C. Interest Income and a credit to Interest Expense D. Interest Receivable and a credit to Interest Income
answer

B
question

For the current fiscal year, Purchases were $166,000, Purchase Returns and Allowances were $3,000 and Freight In was $12,000. If the beginning merchandise inventory was $110,000 and the ending merchandise inventory was $75,000, the Cost of Goods Sold is: A. $186,000 B. $116,000 C. $210,000 D. $216,000
answer

C
question

T/F: Adjusting entries in the general journal do not require detailed explanations since the information about the entries is listed on the worksheet.
answer

False
question

A company reported gross profit of $85,000, total operating expenses of $40,000 and interest income of $2,500. What is the income from operations? A. $47,500 B. $42,500 C. $40,000 D. $45,000
answer

D
question

Included with its bank statement a firm may receive a credit memorandum, which could indicate A. a bank service charge deducted from the firm’s account balance. B. the bank’s return of a dishonored (NSF) check that was issued by a credit customer of the firm. C. a fee for printing new business checks. D. an addition to the firm’s account balance because the bank collected the amount due on a promissory note from a customer of the firm.
answer

D
question

T/F: A check that has a full endorsement can be further endorsed by any bearer and therefore, is not as safe as a check with a blank endorsement.
answer

False
question

A firm’s bank reconciliation statement shows a book balance of $31,640, an NSF check of $800, and a service charge of $40. Its adjusted book balance is A. $32,480 B. $30,800 C. $30,880 D. $32,400
answer

B
question

Merchandise is sold for $8,820, terms 1/10, n/30. Prior to payment, the customer returned $560 of the merchandise. If the invoice is paid within the discount period the amount of the sales discount is: A. $82.60 B. $165.20 C. $88.20 D. $93.80
answer

A
question

T/F: The monthly bank statement should be received and reconciled by the employee who deposits cash receipts and writes the checks.
answer

False
question

T/F: In a firm that has a good system of internal control, cash receipts are deposited often.
answer

True
question

Beckett Co. sold merchandise on account for $10,600, terms 2/10, n/30. Freight charges of $250 were prepaid by the seller and added to the invoice. The customer returned $800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Co. received? A. $9,854 B. $9,604 C. $9,849 D. $9,833
answer

A
question

T/F: Endorsements are placed on the front of a check.
answer

False
question

T/F: Usually a bank provides pre-printed deposit slips.
answer

True
question

After a bank reconciliation statement is completed, a firm may have to make an entry in its accounting records for A. outstanding checks. B. deposits in transit. C. the bank statement balance. D. NSF checks.
answer

D
question

Merchandise costing $5,600 with terms of 1/10, n/30, with transportation costs of $320 included on the invoice (not included in the $5,600) is sold on account. If the bill is paid within ten days, the amount of the purchase discount is A. $59.20 B. $3.20 C. $56.00 D. $52.80
answer

C
question

T/F: The safest endorsement on a check is a full endorsement.
answer

False
question

Which of the following statements is not correct? A. In accounting, the term \”cash\” includes checks, money orders, and funds on deposit in a bank as well as currency and coins. B. The cash register proof is used to enter the cash sales and sales tax in the journal. C. In a well managed business, most bills are paid by cash. D. The petty cash account balance is usually listed separately from the Cash account on the Balance Sheet.
answer

C
question

Which of the following would not be shown as an adjustment to the book balance on a bank reconciliation statement? A. bank service charges B. NSF checks C. deposits in transit D. a charge for printing new checks
answer

C
question

The most appropriate form of endorsement of a check for business purposes is A. the blank endorsement B. the restrictive endorsement C. the full endorsement D. no endorsement
answer

B
question

T/F: Most cash transactions involve checks.
answer

True
question

The total amount earned by the employee is called the A. gross pay B. take home pay C. net pay D. payroll
answer

A
question

T/F: Employees submit Form W-4 to their employers to show the number of withholding allowances they claim for federal income tax withholding purposes.
answer

True
question

When checks are issued to employees after the entry to record the payroll has been made, the accountant would A. debit Salaries Expense, debit Wages Expense, and credit Cash B. debit Salaries and Wages Payable, debit Social Security Tax Payable, debit Medicare Tax Payable, debit Employee Income Tax Payable, and credit Cash C. debit Salaries and Wages Payable and credit Cash D. debit Salaries and Wages Payable and credit Salaries Expense and Wages Expense
answer

C
question

Each type of deduction made from the employees’ earnings is recorded in a separate A. asset account B. expense account C. liability account D. revenue account
answer

C
question

Rick O’Shea, the only employee of Hunter Furniture Company, makes $30,000 per year and is paid once a month. For the month of July, his federal income taxes withheld are $180, state income taxes withheld are $37, social security is 6.2%, Medicare tax is 1.45%, State Unemployment Tax is 4%, and Federal Unemployment tax is .8%. What is Rick’s net pay for July? A. $2,500.00 B. $2,283.00 C. $2,308.75 D. $2,091.75
answer

D
question

An employee whose regular hourly rate is $10 and whose overtime rate is 1.5 times the regular rate worked 48 hours in one week. In the payroll register, the employer should record an overtime premium of A. $480 B. $240 C. $80 D. $40
answer

D
question

T/F: The overtime rate is one and one-half times the regular hourly rate.
answer

True
question

An employee whose regular hourly rate is $10 and whose overtime rate is 1.5 times the regular rate worked 44 hours in one week. In the payroll register, the employer should record an overtime premium of A. $440 B. $220 C. $20 D. $5
answer

C
question

T/F: Salaried employees who hold supervisory or managerial positions generally are not subject to wage and hour laws.
answer

True
question

Jason McCurdy has a regular hourly rate of $10.75. During a two week period, he worked 80 hours and had deductions of $110 for federal income tax, $53.50 for social security tax, and $12.50 for Medicare tax. His net pay was A. $860 B. $684 C. $750 D. $794
answer

B
question

T/F: The gross pay of an hourly employee is determined by subtracting the overtime premium from the regular earnings.
answer

False
question

T/F: The Medicare tax is levied to provide medical care for the employee and the employee’s spouse after they reach age 65.
answer

True
question

For which of the following taxes is there no limit on the amount of annual earnings subject to the tax? A. Federal Unemployment compensation tax B. Social Security tax C. Federal income tax D. State unemployment compensation tax
answer

C
question

The column totals in a payroll register A. are used in the journal entry to record the payroll. B. are posted directly to the general ledger accounts C. are unnecessary D. are neither recorded in a journal entry nor posted to the general ledger accounts.
answer

A
question

Which of the following statements is not correct? A. The amount of social security tax withheld depends on an employee’s gross earnings, marital status, and number of withholding allowances. B. Federal law requires that social security, Medicare, and federal income taxes be deducted from the gros pay of most employees C. Medicare taxes are levied in an equal amount on both employers and employees D. Once an employee’s year-to-date wages reach a certain amount prescribed by law, social security tax is no longer withheld.
answer

A
question

The Payroll Tax Expense account is used to record which of the following taxes? A. Federal unemployment compensation tax B. Federal Income Tax C. State Income Tax D. Sales Tax
answer

A
question

FICA taxes are paid by: A. employees only B. employer and federal government C. both the employee and employer D. neither the employee nor employer
answer

C
question

Publication 15, Circular E contains withholding information A. for social security and Medicare taxes only B. for federal income taxes only C. for social security, Medicare, and federal income tax taxes. D. for federal state income taxes
answer

B
question

T/F: The net amount due employees for their wages is recorded as a debit to Salaries and Wages Payable.
answer

False
question

Assuming a Medicare tax rate of 1.45% and monthly gross wages of $2,500, the amount recorded in Medicare Tax Payable for one quarter for the employee’s payroll deduction is A. a debit for $36.25 B. a credit for $36.25 C. a debit for $108.75 D. a credit for $108.75
answer

D
question

T/F: Time sheets or time cards are used to keep a record of hours worked each day by each employee paid on an hourly basis.
answer

True
question

Salespeople who are paid a percentage of net sales are paid on A. commission basis B. salary basis C. hourly-rate basis D. piece-rate basis
answer

A
question

T/F: The entry to record the employer’s payroll taxes would include a debit to an expense account and a credit to one or more liability accounts.
answer

True
question

The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is most dependent on A. the amount owed B. the number of payroll periods a firm has C. the profit reported by the firm D. the number of employees on the payroll
answer

A
question

Which of the following is not an employer payroll tax? A. federal unemployment tax B. federal income tax C. state unemployment tax D. FICA (Social Security and Medicare)
answer

question

On Form 941, the Employer’s Quarterly Federal Tax Return, a firm calculates its liability for the quarter for A. federal income taxes withheld, social security and Medicare taxes, and FUTA taxes. B. federal income taxes withheld and social security and Medicare taxes. C. social security and Medicare taxes and FUTA taxes. D. federal and state income taxes withheld.
answer

B
question

Roy DeSoto earns a regular hourly salary of $24.50. He is paid time-and-a-half for all hours in excess of 40 in the week. For the week ended March 8, 2013, he worked a total of 50 hours. His gross wages year to date, prior to his March 8, paycheck, are $11,980. Social Security Tax is 6.2%, Medicare Tax is 1.45%, federal unemployment tax is .8% and state unemployment tax is 4.2%, both on a maximum of $7,000 of gross wages per year. What is the employer’s payroll tax expense for Roy for the week ended March 8, 2013? A. $154.96 B. $123.97 C. $170.47 D. $103.08
answer

D
question

T/F: A business pays the social security tax at the same rate and on the same taxable wages as its employees.
answer

True
question

Which of the following forms is submitted with a copy of the Form W-2 for each employee to the Social Security Administration? A. Form W-3 B. Form W-4 C. Form 940 D. Form 941
answer

A
question

All of the following are internal control procedures that are recommended to protect payroll operations except A. assign new employees to work in payroll operations. B. keep payroll records in locked files. C. make voluntary deductions from employee earnings based only on a signed authorization from the employee. D. retain all Forms W-4
answer

A
question

Both the employer and the employee are responsible for paying A. social security and Medicare taxes B. FUTA taxes C. social security, Medicare, and FUTA taxes D. SUTA taxes.
answer

A
question

T/F: The entry to record the social security and Medicare taxes levied on a business includes a debit to Payroll Taxes Expense.
answer

True
question

T/F: At the end of each quarter, the individual earnings records are totaled.
answer

True
question

All of the following are internal control procedures that are recommended to protect payroll operations except A. assign new employees to work in payroll operations B. keep payroll records in locked files. C. make voluntary deductions from employee earnings based only on a signed authorization from the employee D. retain all Forms W-4
answer

A
question

T/F: To achieve internal control over payroll operations, no changes in employee pay rates should be made without written authorization from management.
answer

True
question

All of the following taxes are withheld from an employee’s pay except A. Federal income tax B. SUTA tax C. Medicare tax D. Social security tax
answer

B
question

Which of the following payroll taxes is not paid by the employee? A. federal unemployment tax B. federal income tax C. state income tax D. FICA (Social Security and Medicare)
answer

A
question

Employees’ payments for federal income taxes withheld and social security and Medicare taxes are periodically A. sent directly to the Internal Revenue Service. B. deposited in a special-purpose bank account, controlled by the company, until year-end when the funds are sent to the U.S. Treasury Department. C. sent to the local office of the Internal Revenue Service. D. deposited in a government-authorized financial institution.
answer

D
question

For which of the following is there no limit to the amount of wages subject to the tax? A. federal unemployment tax B. Medicare tax C. state unemployment tax D. Social Security tax
answer

B
question

Kristy Casey earns $39,000 per year and is paid once a month. For January, she had $188 withheld from her pay for federal income taxes, and $52 withheld for health insurance. Social Security and is 6.2% and Medicare tax is 1.45%; the federal unemployment tax rate is .8% and state unemployment tax rates is 4.2%. What is the total employer payroll tax expense for Kristy’s January paycheck? A. $385.13 B. $162.50 C. $248.63 D. $411.13
answer

D
question

Generally, the base earnings subject to state unemployment taxes is A. smaller than the base for social security B. the same as the base of social security C. larger than the base for social security D. the amount of total earnings
answer

A
question

This preprinted government form is used to report federal unemployment taxes. A. Form 940 B. Form 941 C. Form 8109 D. Form W-2
answer

A
question

Tax returns for the federal unemployment tax are due A. weekly B. monthly C. quarterly D. annually
answer

question

T/F: FUTA tax, like social security tax, is levied on both the employer and the employee and, therefore, is withheld from employee’s pay.
answer

False
question

T/F: The employer must issue each employee a Form W-2 by January 15 of the next year.
answer

False
question

Mr. Zee worked 48 hours during the week ended January 18, 2013. He is paid $10 per hour, and is paid time and a half for all hours over 40 in a week. He had $100 withheld from his pay for federal income taxes, and $20 withheld for health insurance. The combined social security and Medicare tax rate is 7.65%, and the federal and state unemployment tax rates are .8% and 3.8%, respectively. All earnings are taxable. What is the total employer payroll tax expense for Mr. Zee’s current paycheck? A. $63.70 B. $39.78 C. $23.92 D. $0
answer

A

Get instant access to
all materials

Become a Member