test6_ch11-13 - Achievement Test 6: Chapters 11-13...

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Achievement Test 6: Chapters 11-13 Name ___________________________ Financial Accounting, 5e Instructor ________________________ Section # _________ Date __________ Part I II III IV V VI VII Total Points 40 14 6 12 6 6 16 100 Score PART I — MULTIPLE CHOICE (40 points) Instructions: Designate the best answer for each of the following questions. ____ 1. Employer payroll taxes include a. state income tax withholding, deductions for charitable contributions, and federal unemployment taxes. b. FICA taxes, state unemployment taxes, and union dues. c. FICA taxes, federal unemployment taxes, and state unemployment taxes. d. federal income tax withholding, federal unemployment taxes, and pension funding. ____ 2. Contingent liabilities a. need not be disclosed if the possibility that the contingency will occur is remote. b. are recorded as liabilities if they can be estimated and are remote. c. are disclosed only if they are probable. d. are always recorded as liabilities if the possibility that the contingency will occur is high. ____ 3. Woody's Retail Store regularly makes payments to a state government for the sales taxes resulting from its sales to customers. These sales taxes a. should appear on Woody's income statement as an expense. b. are based upon a company's gross profit in most states. c. are long-term liabilities when they have been paid. d. are collected by Woody's as an agent for the state's taxing authority. ____ 4. Novak Corporation borrowed $60,000 on March 1, 2005, signing a one year, 6% note payable to Lebo State Bank. The adjusting entry required on December 31, 2005, includes a a. debit to interest expense of $3,000. b. debit to cash of $60,000. c. credit to interest revenue of $3,000. d. debit to interest payable of $3,600.
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Test Bank for Financial Accounting, Fifth Edition ____ 5. Carter Electric began operations in 2005 and provides a one year warranty on the curling irons it sells. They estimate that 10,000 of the 200,000 curling irons sold in 2005 will be returned for repairs and that these repairs will cost $4 per unit. The cost of repairing 8,000 curling irons presented for service in 2005 was $32,000. Carter should report a. warranty expense of $8,000 for 2005. b. warranty expense of $40,000 for 2005. c. estimated warranty liability of $40,000 on December 31, 2005. d. no warranty obligation on December 31, 2005, since this is only a contingent liability. ____ 6. Employees' payroll taxes include a. FICA taxes. b. federal unemployment taxes. c. state unemployment taxes. d. all of the above. ____ 7. A 30% interest in the stock of another company is a. an insignificant investment.
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This note was uploaded on 05/08/2008 for the course ACC 220 taught by Professor J during the Winter '08 term at South Central College: Faribault Campus.

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test6_ch11-13 - Achievement Test 6: Chapters 11-13...

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