会计学原理23版 英文版题库TB-Chap011.docx

Chapter 11 Current Liabilities and Payroll AccountingMULTIPLE CHOICE QUESTIONS1) A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.A) TrueB) False2) Obligations not due within one year or the company's operating cycle, whichever is longer, are reported as current liabilities.A) TrueB) False3) All expected future payments are liabilities.A) TrueB) False4) A single liability cannot be divided between current and noncurrent liabilities.A) TrueB) False5) A company cannot have a liability if the amount of the obligation is unknown.A) TrueB) False6) A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.A) TrueB) False7) Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.A) TrueB) False8) Unearned revenues are current liabilities.A) TrueB) False1Copyright McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.9) Sales Taxes Payable is debited and Cash is credited when companies send sales taxes collected from customers to the government.A) TrueB) False10) Vacation benefits is an example of a known liability.A) TrueB) False11) A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.A) TrueB) False12) Payroll is an example of a contingent liability for the employer.A) TrueB) False13) The full disclosure principle requires the reporting of contingent liabilities that are reasonably possible.A) TrueB) False14) Uncertainties from the development of new competing products are not contingent liabilities.A) TrueB) False15) Debt guarantees are usually disclosed as a contingent liability.A) TrueB) False16) Accounting for contingent liabilities covers three possibilities: (1) The future event is probable and the amount cannot be reasonably estimated; (2) The future event is remote or unlikely to recur; (3) The likelihood of the liability to occur is impossible.A) TrueB) False217) A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.A) TrueB) False18) A high value for the times interest earned ratio means that a company is a lower risk borrower.A) TrueB) False19) The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.A) TrueB) False20) Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.A) TrueB) False21) A company's income before interest expense and taxes is $250,000 and its interest expense is$100,000. Its times interest earned ratio is 2.5.A) TrueB) False22) A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.A) TrueB) False23) Promissory notes cannot be transferred from party to party because they are nonnegotiable.A) TrueB) False24) A note payable can be used to extend the payment due on an account payable.A) TrueB) False325) Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.A) TrueB) False26) Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.A) TrueB) False27) The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.A) TrueB) False28) The amount of FICA tax that employers must pay is twice the amount of the FICA taxes withheld from their employees.A) TrueB) False29) The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.A) TrueB) False30) A high merit rating for state unemployment taxes means that an employer has high employee turnover or seasonal hiring.A) TrueB) False31) Employers must keep individual earnings reports for each employee.A) TrueB) False32) Deposits of amounts payable to the federal government may be paid through federal depository banks.A) TrueB) False433) FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.A) TrueB) False34) The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.A) TrueB) False35) Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds$500.A) TrueB) False36) A known obligation of an uncertain amount that can at least be reasonably estimated is reported as an estimated liability.A) TrueB) False37) Accrued vacation benefits are a form of estimated liability for an employer.A) TrueB) False38) A liability is incurred when income is earned because income tax expense is created by earning income.A) TrueB) False39) A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.A) TrueB) False40) Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.A) TrueB) False5Copyright McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.41) Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer, which is the Form W-4.A) TrueB) False42) Companies with many employees rarely use a special payroll bank account from which to pay employees.A) TrueB) False43) The report that shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period is the payroll register.A) TrueB) False44) An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay.A) TrueB) False45) When the number of withholding allowances claimed on Form W-4 increases, the amount of income tax withheld decreases.A) TrueB) False46) All of the following statements regarding liabilities are trueexcept:A) Unearned future wages to be paid to employees should be recorded as liabilities.B) For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services.C) Information about liabilities is more useful when the balance sheet identifies them as either current or long term.D) Liabilities can involve uncertainty in whom to pay.E) A liability is a probable future payment of assets or services.47) Obligations to be paid within one year or the company's operating cycle, whichever is longer, are:A) Current assets.B) Bills.C) Earned revenues.D) Operating cycle liabilities.E) Currentliabilities.6Copyright McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.48) Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:A) Currentliabilities.B) Long-termliabilities.C) Bills.D) Operating cycle liabilities.E) Current assets.49) All of the following statements regarding uncertainty in liabilities are trueexcept:A) Liabilities can involve uncertainty in whom to pay.B) A company can be aware of an obligation but not know how much will be required to settle it.C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid.D) A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date.E) A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.50) In order to be reported, liabilities must:A) Involve an outflow of cash.B) Always have a definite date for payment.C) Be for a specific amount.D) Sometimes be estimated.E) Be certain.51) All of the following are true of known liabilities except:A) Include accounts payable, notes payable, and payroll.B) Are obligations set by agreements, contracts, or laws.C) May depend on some future event occurring.D) Are definitely determinable.E) Are measurable.52) Accounts payable are:A) Amounts owed to suppliers for products and/or services purchased on credit.B) Always payable within 30 days.C) Long-termliabilities.D) Estimated liabilities.E) Not usually due on specific dates.753) Amounts received in advance from customers for future products or services:A) Are liabilities.B) Are revenues.C) Require an outlay of cash in the future.D) Are not allowed under GAAP.E) Increase income.54) When a company is obligated for sales taxes payable, it is reported as a(n):A) Business expense.B) Estimated liability.C) Currentliability.D) Long-termliability.E) Contingentliability.55) Which of the following do not apply to unearned revenues?A) Also called collections in advance.B) Amounts received in advance from customers for future delivery of products or services.C) Also called prepayments.D) Also called deferred revenues.E) Amounts to be received in the future from customers for delivery of products or services in the current period.56) If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as:A) Debit Cash, credit Unearned Revenue.B) Debit Sales, credit Unearned Revenue.C) Debit Unearned Revenue, credit Sales.D) Debit Cash, credit Ticket sales payable.E) Debit Unearned Revenue, credit Cash.57) A contingent liability is:A) An obligation not requiring future payment.B) Always of a specific amount.C) An obligation arising from a future event.D) An obligation arising from the purchase of goods or services on credit.E) A potential obligation that depends on a future event arising from a past transaction or event.858) Contingent liabilities are recorded or disclosed unless they are:A) Possible and estimable.B) Probable and not estimable.C) Probable and estimable.D) Remote.E) Reasonably possible.59) Contingent liabilities must be recorded if:A) The future event is reasonably possible but not estimable.B) The amount owed cannot be reasonably estimated.C) The future event is probable but not estimable.D) The future event is remote.E) The future event is probable and the amount owed can be reasonably estimated.60) Debt guarantees are:A) A bad business practice.B) Considered to be current liabilities.C) Recorded as liabilities even though it is highly unlikely that the original debtor will default.D) Considered to be contingent liabilities.E) Never disclosed in the financial statements.61) In the accounting records of a defendant, lawsuits:A) Are estimated liabilities.B) Should always be disclosed.C) Should always be recorded.D) Should be recorded if payment for damages is probable and the amount can be reasonably estimated.E) Should never be recorded.62) Uncertainties such as natural disasters are:A) Disclosed because of their usefulness to financial statements.B) Contingent liabilities because they are future events arising from past transactions or events.C) Estimated liabilities because the amounts are uncertain.D) Not contingent liabilities because they are future events not arising from past transactions or events.E) Reported in the same way as debt guarantees.9Copyright McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.63) The times interest earned ratio reflects:A) A company's ability to pay interest even if sales decline.B) The relation between assets and liabilities.C) A company's ability to pay its operating expenses on time.D) The relation between income and debt.E) A company's profitability.64) Interest expense is not:A) Likely to stay the same when sales change.B) A fixed expense.C) A factor in determining a company's borrowing risk.D) Incurred on current liabilities.E) Likely to fluctuate when sales change.65) Times interest earned is calculated by:A) Dividing income before interest expense and income taxes by interest expense.B) Dividing interest expense by income before interest expense.C) Multiplying interest expense by income.D) Dividing income before interest expense by interest expense and income taxes.E) Multiplying interest expense by income before interest expense.66) If the times interest earned ratio:A) Is greater than 1.5, the company is in default.B) Increases, then risk decreases.C) Is greater than 3.0, the company is likely carrying too much debt.D) Increases, then risk increases.E) Is less than 1.5, the company is carrying too little debt.67) A company's had fixed interest expense of $5,000, its income before interest expense and income taxes is $17,000, and its net income is $9,400. The company's times interest earned ratio equals:A) 3.4.B) 1.8.C) 0.5.D) 1.9.E) 0.3.68) The correct times interest earned computation is:A) (Net income - Interest expense - Income taxes)/Interest expense.B) (Net income + Interest expense - Income taxes)/Interest expense.C) Interest expense/(Net income + Interest expense + Income taxes expense).D) (Net income - Interest expense + Income taxes)/Interest expense.E) (Net income + Interest expense + Income taxes)/Interest expense.10Copyright McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.69) A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:A) 1.75B) 0.29C) 2.50D) 3.50E) 0.5070) A company's fixed interest expense is $8,000, its income before interest expense and income taxes is $32,000. Its