CURRENT LIABILITIES, PAYROLL, AND OTHER LIABILITIES PART I OF II

1. Notes may be issued

a. when assets are purchased
b. to creditor's to temporarily satisfy an account payable created earlier
c. when borrowing money
d. all of the above

2. On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable on an overdue account payable to Seller
Co. Assume that the fiscal year of Alton Co. ends June 30. Which of the following relationships is true?
a. Alton is the creditor and credits Accounts Receivable
b. Seller is the creditor and debits Accounts Receivable
c. Seller is the borrower and credits Accounts Payable
d. Alton is the borrower and debits Accounts Payable

3. Which of the following would most likely be classified as a current liability?

a. Two-year Notes Payable
b. Bonds Payable
c. Mortgage Payable
d. Unearned Rent

4. Proper payroll accounting methods are important for a business for all the reasons below except
a. good employee morale requires timely and accurate payroll payments
b. payroll is subject to various state regulations
c. to help a business with cash flow problems by delayed payments of payroll taxes to state agencies
d. payroll and related payroll taxes have a significant effect on the net income of most businesses

5. The amount of national income taxes withheld from an employee's gross pay is recorded as a(n)
a. payroll expense
b. contra account
c. asset
d. liability

6. The total earnings of an employee for a payroll period is referred to as

a. take-home pay
b. pay net of taxes
c. net pay
d. gross pay

7. Payroll taxes levied against employees become liabilities

a. the first of the following month
b. when salary is accrued
c. when data is entered in a payroll register
d. at the end of an accounting period
8. The detailed record indicating the data for each employee for each payroll period and the cumulative total
earnings for each employee is called the
a. payroll register
b. payroll check
c. employee's earnings record
d. employer's earnings record

9. An aid in internal control over payrolls that indicates employee attendance is

a. time card
b. voucher system
c. payroll register
d. employee's earnings record

10. Which of the following is not an internal control procedure for payroll?
a. observe clocking in and out time for the employees
b. payroll depends on a fired employee's supervisor to notify them when an employee has been fired
c. payroll requires employees to show identification when picking up their paychecks
d. changes in pay rates on a computerized system must be tested by someone independent of payroll