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Exam 9: Current Liabilities

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Question 91

Multiple Choice

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Employee vacation benefits:

A) Are estimated liabilities.
B) Are contingent liabilities.
C) Are recorded as an expense when the employee takes a vacation.
D) Are recorded as an expense when the employee retires.
E) Increase net income.

F) B) and E)
G) A) and C)

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Question 92

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Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

A) True
B) False

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Question 93

Multiple Choice

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If a company had income before interest and taxes in the amount of $2,345,540 and a times interest earned ratio of 5.2,what is the total amount of the company's interest expense?

When companies pay the government collected sales tax,sales taxes payable is credited and cash is debited.

If a company had net income of $1,486,875,a times interest earned ratio of 4.0,a tax rate of 35%,and operating income of $3,050,000,what is the company's interest expense for the year?

The Federal Insurance Contributions Act (FICA) requires that each employer file a:

Identify and explain the types of employer payroll taxes.

Tree Frog Company is organized as a LLC and does not pay income taxes.The company has fixed interest expense of $5,750,sales of $253,000,and variable expenses of $189,750.What is the company's times interest earned ratio?

An employee earnings report:

The main purpose of the wage bracket withholding table is to:

An estimated liability:

A company had a fixed interest expense of $6,000,its income before interest expense and any income taxes was $18,000 and its net income was $8,400.The company's times interest earned ratio is equals to

FUTA requires employers to pay a federal unemployment tax on the first $7,000 in salary or wages paid to each employee.

Times interest earned can be calculated by multiplying income by the interest rate on a company's debt.

A company's employees had the following earnings records at the close of the current payroll period: $\begin{array} { | l | r | r | } \hline \text { Employees } & \begin{array} { c } \text { Earnings through } \\\text { Prior Pay Period }\end{array} & \begin{array} { c } \text { Earinngs This } \\\text { Pay Period }\end{array} \\\hline \text { D. Adams } & \$ 1,300 & \$ , 900 \\\hline \text { J. Hess } & 6,100 &2 , 5 0 0 \\\hline \text { R. Luil } & 9 , 5 0 0&3 , 1 0 0 \\\hline \text { T. Morales } & 4,800 & 1,400 \\\hline \text { L. Vang } & 10,000 & 3 , 0 0 0 \\\hline\end{array}$ The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $87,000 plus 1.45% FICA Medicare on all wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000.Compute the employer's total payroll taxes expense for the current pay period.

A company's income before interest expense and income taxes was $395,000 in 2013 and $427,000 in 2014.Its fixed interest expense was $125,000 for both years.Calculate the company's times interest earned ratio and comment on its level of risk.

____________________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.

In the accounting records of a defendant,lawsuits:

A contingent liability:

Obligations not expected to be paid within one year (or the company's operating cycle if longer than one year) are reported as: