Question 1

Modern Age Company made total cash sales in February of $666,000,which are subject to 7.5% sales tax.Prepare the summary entry to record the transaction.Omit explanation.

Accepted Answer

The answer of Modern Age Company made total cash sales...

Question 2

Which of the following is a characteristic of a current liability?
A)It creates a present obligation for future payment of cash or services.
B)It cannot be settled with services.
C)It is an avoidable obligation.
D)It occurs because of a future transaction or event.

Accepted Answer

A current liability is a debt or obligation that is expected to be settled within one year or the operating cycle of a business, whichever is longer. It creates a present obligation for future payment of cash or services, meaning that the company owes something to another party and must provide payment or services to satisfy the obligation. Option B and C are incorrect as some current liabilities can be settled with services, and they are not avoidable obligations. Option D is incorrect as a current liability is a present obligation, not one that occurs because of a future transaction or event.

Question 3

Any portion of a long-term liability that is due with the next year is reported as a current liability.

Accepted Answer

This is a correct statement in accounting. Any portion of a long-term liability that is due within the next year is recognized as a current liability on the balance sheet.

Question 4

Mars Company had cash sales of $10,000.The state sales tax rate is 10.8%.What amount is debited to the Cash account?
A)$10,000
B)$11,080
C)$1080
D)$1000

Accepted Answer

11ea8a75_4320_53b7_a2a1_9d2907e80862_TB6701_00

Question 5

Because amounts owed for products or services on account are typically due in 60 days,they are current liabilities.

Accepted Answer

Because amounts owed for products or services on account are typically due in 30 days,they are current liabilities.

Question 6

Amounts owed for products or services purchased on account are called ________.
A)accounts payable
B)unearned revenue
C)accrued expense
D)warranty payable

Accepted Answer

Accounts payable represent the amounts owed to suppliers or vendors for goods or services purchased on credit or on account, but not yet paid for.

Question 7

The IFRS definitions of current and long-term liabilities are much different than the U.S.GAAP definitions.

Accepted Answer

IFRS defines current and long-term liabilities in the same manner as U.S.GAAP.

Question 8

Current liabilities must be paid either in cash or with goods and services within one year or within the entity's operating cycle,if the cycle is longer than a year.

Accepted Answer

Current liabilities are obligations that must be fulfilled within a year or within the operating cycle, whichever is longer. They include accounts payable, short-term loans, and other debts that will come due in the near future. These liabilities are typically settled with either cash or goods and services.

Question 9

Which of the following accounts is credited by the seller when tax is collected on retail sales?
A)Accounts Payable
B)Payroll Tax
C)Sales Tax Payable
D)Unearned Revenue

Accepted Answer

Sales Tax Payable is credited when tax is collected on retail sales. This account is a liability account and represents the amount of tax collected from customers that the seller owes to the government.

Question 10

Sales revenue for a sporting goods store amounted to $526,000 for the current period.All sales are on account and are subject to a sales tax of 10%.Which of the following would be included in the journal entry to record the sales transaction?
A)a debit to Sales Revenue for $526,000
B)a credit to Accounts Receivable for $526,000
C)a debit to Sales Tax Payable for $52,600
D)a debit to Accounts Receivable for $578,600

Accepted Answer

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Question 11

Unearned revenue arises because the business receives goods or services before payment has been made.

Accepted Answer

Unearned revenue arises when a business has received cash in advance of providing goods or performing work and,therefore,has an obligation to provide goods or services to the customer in the future.

Question 12

Sales tax is an expense of the business.

Accepted Answer

Sales tax is a current liability.

Question 13

Amounts owed for products or services purchased on account are accounts receivable.

Accepted Answer

Amounts owed for products or services purchased on account are accounts payable. Accounts receivable refers to the amounts that others owe to the company for products or services delivered.

Question 14

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

Accepted Answer

Sales Tax Payable is indeed calculated as a percentage of the amount of the sale. The percentage varies from state to state and can range from 0% to over 10%.

Question 15

Which of the following would be included in the journal entry to record the payment of sales tax payable?
A)a debit to Sales Tax Payable
B)a credit to Sales Tax Expense
C)a debit to Sales Tax Expense
D)a credit to Sales Tax Payable

Accepted Answer

A debit to Sales Tax Payable is correct because when a company pays its sales tax liability, it reduces the amount owed, which is recorded by debiting the Sales Tax Payable account.

Question 16

Barron Company sold goods for $883,500 on account.The company operates in a state that imposes a 9% sales tax.What is the amount of the sales tax payable to the state?
A)$79,515
B)$39,758
C)$19,879
D)$159,030

Accepted Answer

11ea8a75_4320_7ac8_a2a1_d9fe25070aac_TB6701_00

Question 17

Which of the following statements regarding Accounts Payable is incorrect?
A)The Accounts Payable account is decreased with a credit.
B)Accounts payable occur because the business receives the goods or services before payment has been made.
C)Because accounts payable are typically due in 30 days,they are current liabilities.
D)Accounts payable represent debts owed to creditors.

Accepted Answer

The Accounts Payable account is increased with a credit and decreased with a debit.

Question 18

Unearned revenues are current liabilities until they are earned.

Accepted Answer

Unearned revenues are received in advance for goods or services that have not been provided yet. Therefore, they are classified as a current liability until the goods or services are provided and the revenue is earned. Once revenue is earned, it is no longer classified as unearned and is recognized as revenue in the income statement.

Question 19

Restaurant Foods Company had cash sales of $598,000 during the month of August.Sales taxes of 6.5% were collected on the sales.Prepare the journal entry to record the sales revenue and sales tax for the month.Omit explanation.

Accepted Answer

The answer of Restaurant Foods Company had cash sales of...

Question 20

Venus Corp.sold goods,with a selling price of $17,221,for cash.The state sales tax rate is 8%.What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar. )
A)$17,221
B)$18,599
C)$1378
D)$15,843

Accepted Answer

11ea8a75_4320_0596_a2a1_5ff02496aba8_TB6701_00

Quiz 11: Current Liabilities and Payroll

Modern Age Company made total cash sales in February of $666,000,which are subject to 7.5% sales tax.Prepare the summary entry to record the transaction.Omit explanation.

Which of the following is a characteristic of a current liability?

Any portion of a long-term liability that is due with the next year is reported as a current liability.

Mars Company had cash sales of $10,000.The state sales tax rate is 10.8%.What amount is debited to the Cash account?

Because amounts owed for products or services on account are typically due in 60 days,they are current liabilities.

Amounts owed for products or services purchased on account are called ________.

The IFRS definitions of current and long-term liabilities are much different than the U.S.GAAP definitions.

Current liabilities must be paid either in cash or with goods and services within one year or within the entity's operating cycle,if the cycle is longer than a year.

Which of the following accounts is credited by the seller when tax is collected on retail sales?

Sales revenue for a sporting goods store amounted to $526,000 for the current period.All sales are on account and are subject to a sales tax of 10%.Which of the following would be included in the journal entry to record the sales transaction?

Unearned revenue arises because the business receives goods or services before payment has been made.

Sales tax is an expense of the business.

Amounts owed for products or services purchased on account are accounts receivable.

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

Which of the following would be included in the journal entry to record the payment of sales tax payable?

Barron Company sold goods for $883,500 on account.The company operates in a state that imposes a 9% sales tax.What is the amount of the sales tax payable to the state?

Which of the following statements regarding Accounts Payable is incorrect?

Unearned revenues are current liabilities until they are earned.

Restaurant Foods Company had cash sales of $598,000 during the month of August.Sales taxes of 6.5% were collected on the sales.Prepare the journal entry to record the sales revenue and sales tax for the month.Omit explanation.

Venus Corp.sold goods,with a selling price of $17,221,for cash.The state sales tax rate is 8%.What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar. )