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ACCOUNTING TEST PREP 3 True/False Indicate whether the statement is true or false. ____ 1. A check should be written before the check stub is filled out. ____ 2. Cash is a business's most liquid asset. ____ 3. The ending balance on the bank statement seldom agrees with the balance in the checkbook. ____ 4. Bank service charges should be recorded in the checkbook before reconciling the bank statement. ____ 5. An example of an internal control is the daily deposit of cash receipts in the bank. ____ 6. A stop payment order and voiding a check mean the same thing. ____ 7. Prompt reconciliation of the bank statement is a good way to guard against disorderly cash records or cash loss. ____ 8. Checks written in pencil are acceptable. ____ 9. When a business receives a check in payment for a product or service, it acquires the right to that check. ____ 10. Outstanding checks and voided checks are the most frequent causes for differences between the bank statement balance and the checkbook balance. ____ 11. The FICA tax has no maximum taxable amount. ____ 12. A Form W-4 lists the marital status and number of exemptions claimed by the employee. ____ 13. The number of hours worked multiplied by the hourly wage gives the net earnings for the pay period. ____ 14. The total FICA tax is divided into two parts: the social security tax and the Medicare tax. ____ 15. An example of a voluntary deduction is one for a health insurance premium. ____ 16. Overtime is paid to most employees after they work more than 40 hours. ____ 17. The payroll register summarizes information about employees' earnings during a pay period. ____ 18. Businesses often use computers and special software to prepare payroll in an effort to reduce simple mathematical errors and to improve productivity. ____ 19. In a few states, employees are also required to pay unemployment taxes. ____ 20. The Cash in Bank account is debited for the amount the employees actually earn in the pay period. ____ 21. The only taxes that the employer must pay are unemployment taxes. ____ 22. The amount entered for Payroll Tax Expense is the total gross earnings of the pay period. ____ 23. The social security tax is paid by both employer and employees. ____ 24. Amounts deducted from employees' earnings and held for payment by the employer become liabilities to the business. ____ 25. The entry for Salaries Expense is recorded each pay period, but the entry for Payroll Tax Expense is recorded only at the end of the year.
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____ 26. When a business transfers money from its regular checking account to the payroll checking account, the check is written for the total net pay amount. ____ 27. An employer normally pays federal withholding taxes, social security taxes, and medicare taxes once a year. ____ 28.
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