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Chapters 1-4The Accounting Cycle
Chapters 5-8Current Assets
Chapters 9-11Long-Term Assets
Chapters 12-14Liabilities/Equities
Chapters 15-16Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20Managerial/Cost
Chapters 21-24Budgeting/Decisions

Chapters 1-4The Accounting Cycle
Chapters 5-8Current Assets
Chapters 9-11Long-Term Assets
Chapters 12-14Liabilities/Equities
Chapters 15-16Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20Managerial/Cost
Chapters 21-24Budgeting/Decisions

Chapter 12 – Multiple Choice

By admin / January 20, 2016

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Question 1 of 8

1. Question
Typical current liabilities include:
- Prepayments by customers.
- Travel advances to employees.
- The principal portion of a mortgage note that is due beyond one year or the operating cycle, whichever is longer.
- Accumulated depreciation.
Correct

Incorrect
Question 2 of 8

2. Question
On June 1, Whit Corporation purchased a truck for $30,000. To pay for the truck, Whit issued and recorded a six-month note payable for $31,500. No other entry was recorded for the note until payment on December 1. The journal entry to record payment of the note would include:
- A debit to Interest Expense for $1,500.
- A debit to Discount on Notes Payable for $1,500.
- A debit to Notes Payable for $30,000.
- A debit to Cash for $31,500.
Correct

Incorrect
Question 3 of 8

3. Question
The Discount on Notes Payable:
- Is a contra liability account.
- Is a contingent liability account.
- Should be reported as an asset because of its debit balance.
- Is amortized to reduce interest expense over the life of the note payable.
Correct

Incorrect
Question 4 of 8

4. Question
If the journal entry to record an accrued liability were accidentally recorded twice, it would:
- Understate income for the year.
- Overstate income for the year.
- Have no effect on income for the year.
- Understate accrued liabilities at the end of the year.
Correct

Incorrect
Question 5 of 8

5. Question
The employee’s withholding allowance certificate is popularly referred to as a:
- W-2.
- W-4.
- Form 1040.
- Payroll register.
Correct

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Question 6 of 8

6. Question
The FICA tax is levied on:
- Employees only.
- Employers only.
- Both employees and employers.
- Earnings in excess of base amounts.
Correct

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Question 7 of 8

7. Question
Burgundy Drug Store paid $137,000 in salaries during 20X1. Salary expense for the year was $148,500 and salaries payable at the end of 20X1 amounted to $17,300. What was the amount of salaries payable as of January 1, 20X1?
- $5,800
- $11,500
- $17,300
- $28,800
Correct

Incorrect
Question 8 of 8

8. Question
The gross payroll for Zurich Corporation was $100,000. Federal income tax withheld from employee paychecks amounted to $24,000, state income tax withheld amounted to $3,000, Social Security amounted to $8,500 (the combined employee and employer portions), and Medicare amounted to $3,500 (the combined employee and employer portions). Furthermore, employees elected to have $1,000 of insurance and charitable contributions withheld from their paychecks. How much was net pay?
- $34,000
- $60,000
- $66,000
- $72,000
Correct

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Illustrative Entries

Examples of journal entries for numerous sample transactions

Account Types

Typical financial statement accounts with debit/credit rules and disclosure conventions

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