Practice Exam 3b

Practice Exam 3b - 1. Which of the following is not a...

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1. Which of the following is not a liability? A. Notes payable. B. Current portion of long-term debt. C. An unused line of credit. D. Unearned revenue. 2. Which of the following is not an employer payroll cost? A. FICA taxes. B. Federal and state unemployment taxes. C. Federal and state income taxes. D. Employer contributions to a retirement plan. 3. Which of the following is true regarding FICA taxes? A. FICA taxes are paid only by the employee. B. FICA taxes are paid only by the employer. C. FICA taxes are paid in equal amounts by the employee and the employer. D. FICA taxes are paid in different amounts by the employee and the employer. 4. Mike Gundy is a college football coach making a salary of $2,400,000 a year ($200,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the FICA maximum base amount is $106,800, how much will be withheld during the year for the coach's Social Security and Medicare. A. $34,800. B. $41,422. C. $183,600. D. None of these amounts is correct 5. If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is probable , a contingent liability should be A. Disclosed, but not reported as a liability. B. Disclosed and reported as a liability. C. Neither disclosed nor reported as a liability. D. Reported as a liability, but not disclosed.
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6. Which of the following is true regarding the relationship between the current ratio and the acid-test ratio? A. The current ratio will always be equal to or larger than the acid-test ratio for a specific company. B. The acid-test ratio will always be equal to or larger than the current ratio for a specific company. C. Either the current ratio or the acid-test ratio could be larger for a specific company. D. One ratio will always exceed 1.0, while the other will always be less than 1.0. 7. Megginson, Inc. issued a five-year corporate bond of $300,000 with a 5% interest rate for $330,000. What effect would the bond issuance have on Megginson, Inc.'s accounting equation? 8. The advantages of obtaining long-term funds by issuing bonds, rather than issuing additional common stock, include which of the following? 9. The price of a bond is equal to: A. the future value of the face amount only. B. the present value of the interest only.
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Practice Exam 3b - 1. Which of the following is not a...

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