Question

9) Amounts received in advance from customers for future products or services: A) Are liabilities. B) Are revenues C) Require an outlay of cash in the future. D) Increase income. E) Are not allowed under GAAP 10) If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as: A) Debit Unearned Revenue, credit Cash. B) Debit Unearmed Revenue, credit Sales. C) Debit Cash, credit Ticket sales payable. D) Debit Sales, credit Uneaned Revenue E) Debit Cash, credit Unearned Revenue. 11) Contingent liabilities must be recorded if: A) The future event is remote. B) The future event is probable but not estimable. C) The amount owed cannot be reasonably estimated. D) The future event is probable and the amount owed can be reasonably estimated. E) The future event is reasonably possible but not estimable. 12) Times interest earned is calculated by: A) Dividing interest expense by income before interest expense. B) Dividing income before interest expense and income taxes by interest expense. C) Dividing income before interest expense by interest expense and income taxes. D) Multiplying interest expense by income. E) Multiplying interest expense by income before interest expense. 13) A company's income before interest expense and income taxes is $125,000 and its interest expense is $55,000. Its times interest earned ratio is: A) 0.44 E) 1.83 D) 2.27 C) 0.83 B) 1.00 14) An employee earned $43,000 during the year working for an employer when the maximum limit for Social Security was $127,200. The FICA tax rate for Social Security is 6.2 % and the FICA tax rate for Medicare is 1.45 %. The employee's annual FICA taxes amount is: A) $3289.50. E) $623.50. D) $5955.50. B) $2042.50. C) $2666.00. 15) On November 1, Alan Company signed a 120-day, 9 % note payable, with a face value of $25,200. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.) A) Debit Interest Expense, $378; credit Interest Payable, $378. B) Debit interest payable, $252; credit interest expense, $252. C) Debit Interest Payable, $756; credit Interest Expense, $756. D) No adjusting entry is required. E) Debit Interest Expense, $504; credit Interest Payable, $504.

Answer 1

9) Amount received in advance from customers for future products or services: A) Are liabilities 10) If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as: E) Debit Cash, credit Unearned Revenue 11) Contingent liabilities must be recorded if: D) The future is probable and the amount owed can be reasonably estimated 12) Times interest earned is calculated by: B) Dividing income before interest expense and income taxes by interest expense