Kaplan University AC 300 Unit 7 Quiz

 1. Question : All of the following payroll taxes are levied against the employer except

  Student Answer:    FICA taxes
     federal unemployment taxes
     state unemployment taxes
      federal income taxes withheld

  Points Received: 0 of 2
  Comments: 

   
   
 2. Question : Existing claims related to product warranties and litigation as of December 31, 2010 indicate that it is probable that a liability has been incurred. However, as of December 31, 2010, the exact amount of the obligation cannot be reasonably estimated, but a range of possible amounts has been determined. Based on these facts, an estimated loss contingency should be

  Student Answer:    accrued
     disclosed but not accrued
     neither accrued nor disclosed
      classified as an appropriation of retained earnings

  Points Received: 0 of 2
  Comments: 

   
   
 3. Question : Which of the following loss contingencies is not usually accrued?

  Student Answer:    product warranty obligations
     premium offer obligations
      risk of loss from fire
     noncollectibility of receivables

  Points Received: 0 of 2
  Comments: 

   
   
 4. Question : Miller Company provides a bonus compensation plan under which key employees receive bonuses equal to 10% of Miller's income after deducting income taxes but before deducting the bonus. If income before income tax and the bonus is $400,000 and the income tax rate is 30%, the bonuses should total

  Student Answer:   $27,160
      $28,866
     $36,400
     $40,000

  Points Received: 2 of 2
  Comments: 

   
   
 5. Question : In 2010, the Markel Company sold 14,000 washing machines. Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50. During 2010, Markel had an actual outlay of $48,000 for repairs under warranty. Markel uses the expense warranty accrual method. At what amount should the company record warranty expense for 2010?

  Student Answer:   $42,000
     $48,000
      $84,000
     $96,000

  Points Received: 2 of 2
  Comments: 

   
   
 6. Question : The Chipo Company includes one coupon having no expiration date with its deluxe snack pack. Upon return of 10 coupons, Chipo will send a silver chip clip, which costs Chipo $1.50 each. Past experience indicates that 30% of coupons issued will be redeemed. Chipo began this promotion in 2010 and sold 1,000,000 deluxe snack packs. During 2010, 90,000 coupons were received and 9,000 chip clips were distributed to customers. The December 31, 2010 balance sheet should include a liability for coupons outstanding of

  Student Answer:    $18,000
     $180,000
      $31,500
     $50,000

  Points Received: 0 of 2
  Comments: 

   
   
 7. Question : Which of the following statements is true?

  Student Answer:   One of the essential characteristics of a liability is that the transaction or other event obligating the entity will probably occur in the future.
      To be a liability, there must be a duty or responsibility that obligates a particular entity.
     To qualify as a liability, there must be a legally enforceable claim.
      In order to have a liability, the identity of the recipient must be known.

  Points Received: 0 of 2
  Comments: 

   
   
 8. Question : The operating cycle is typically defined as the time it requires to convert

  Student Answer:    cash to inventory to receivables
     raw materials to finished goods
     finished goods to receivables to cash
      cash to inventory to receivables to cash

  Points Received: 0 of 2
  Comments: 

   
   
 9. Question : The Ancira Company closed its books annually on December 31, while the city in which it is located has a fiscal year beginning on April 1 and ending on March 31. Taxes on property are assessed on April 1 of each year. Property taxes in the amount of $360,000 and $400,000 were assessed on April 1, 2010 and 2011, respectively. For the year ended December 31, 2011, the Ancira Company would report property tax expense of

  Student Answer:    $360,000
     $370,000
     $380,000
      $390,000

  Points Received: 0 of 2
  Comments: 

   
   
 10. Question : Which of the following statements is true?

  Student Answer:   No loss contingencies should be disclosed if there is just a reasonable possibility of a loss.
     Indirect guarantees should normally be accrued.
      In the case of loss contingencies, accrual can be made even if the exact payee and payment date are not known.
     Losses may be accrued for unasserted claims and other potential unfiled lawsuits.