UESTION 1 A current liability is a debt that can reasonably expected to be paid

between 6 months and 18 months.

out of currently recognized revenues.

within one year.

out of cash currently on hand

QUESTION 2 A pension plan which requires the employer to make annual pension contributions, with no promise to employees regarding future pension payments, is termed

funded

unfunded

defined benefit

defined contribution

QUESTION 3 Assume that social security taxes are payable at a 6% rate on the first $100,000 of earnings and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee, George Jones, earns $2,500 for the current week and Jones' year-to-date earnings before this week were $6,800, what is the total payroll taxes related to the current week?

$187.50

$196.70

$344.50

$9.20

QUESTION 4 Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx. Gross payroll $18,000 Federal income tax withheld $4,000 Social security rate 6% Federal unemployment tax rate .8% Medicare rate 1.5% State unemployment tax rate 5.4% Salaries Payable would be recorded for

$18,000

$12,950

$12,650

$11,534

QUESTION 5 During May, Blast sold 500 portable CD players for $50 each. Each CD player cost Blast $25 to purchase and carried a one-year warranty. If 10 percent typically need to be replaced over the warranty period, what amount should Blast debit Product Warranty Expense for in May?

$2,500

$1,250

$250

$1,000

QUESTION 6 During its first year of operations, a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000. The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year?

$15,000

$36,500

$6,500

$21,500

QUESTION 7 Elgin Company sells merchandise with a one year warranty. Sales consisted of 2,500 units in 2012 and 2,000 units in 2013. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013 for the 2012 sales. Similarly, 30% of repairs will be made in 2013 and 70% in 2014 for the 2013 sales. In the 2013 income statement, how much of the warranty expense shown will be due to 2012 sales?

$7,500

$17,500

$25,000

$0

Most employers are required to withhold from employees which of the following employment taxes?

FICA tax

FICA tax, state and federal unemployment compensation tax

only state unemployment compensation tax

only federal unemployment compensation tax

9 Payroll entries are made with data from the

wage and tax statement

employee's earning record

employer's quarterly federal tax return

payroll register

QUESTION 10 Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $99,350 and $91,000 respectively. Their earnings for the last completed payroll period of the year are $850 each. The amount of earnings subject to social security tax at 6% is $100,000. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

$127.50

$115.50

$112.50

$0

QUESTION 11 Research Company sells merchandise with a one year warranty. In 2012, sales consisted of 2,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income statement, Research should show warranty expense of

$25,000

$7,500

$17,500

$0

QUESTION 12 The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)

payroll expense

contra account

asset

liability

QUESTION 13 The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the

payroll register

payroll check

employee's earnings record

employer's earnings record

QUESTION 14 Use the following information to answer the following questions. Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 - 31, 20xx. Gross payroll $10,000 Federal income tax withheld $1,500 Social security rate 6% Federal unemployment tax rate .8% Medicare rate 1.5% State unemployment tax rate 5.4% Assuming that all wages are subject to federal and state unemployment taxes, the Payroll Taxes Expense would be recorded as:

$1,370

$750

$620

$2,870

QUESTION 15 Which of the following is not an internal control procedure for payroll?

employees observed clocking in and out

payroll depends on a fired employee's supervisor to notify them when an employee has been fired

payroll requires employees to show identification when picking up their paychecks

changes in pay rates on a computerized system must be tested by someone independent of payroll