Accounting 17

1. Which of the following taxes is not included in the payroll tax expense of the employer?
Which of the following taxes is not included in the payroll tax expense of the employer?
A-State unemployment taxes
B-FICA taxes
C-Federal income taxes
D-Federal unemployment taxes

C-Federal Income Taxes

Vacation Pay-$110,000
Sick Pay-$80,000

In its December 31 balance sheet, what amount should Morgan report as its liability for compensated absences?
A-$0
B-$80,000
C-$110,000
D-$190,000

D-$190,000

Evans Inc., pays its managers a bonus consisting of 7% of net income (income after deduction of both bonus and income taxes). The company's income tax rate is 20%. Income for the current year is $600,000.

How much bonus would be paid for the current year (rounded to whole dollars)?
A-$31,248
B-$31,818
C-$33,600
D-$42,000

B-$31,818

Dorman Corporation has an incentive compensation plan under which the sales manager receives a bonus equal to 10% of the company's income after deducting income taxes but before deducting the bonus. Income before income tax and the bonus is $80,000. The effective income tax rate is 40%. How much is the bonus?
A-$4,800
B- $5,000
C-$8,000
D-$4,320

B-$5,000 .10 ($80,000 - T); T = .40 ($80,000 - B); Substitute T in the Bonus equation: B = .10 ($80,000 - .40 ($80,000 - B); B = $5,000

Which of the following payroll taxes are paid by the employer?
Which of the following payroll taxes are paid by the employer?
A-FICA taxes
B-State unemployment taxes
C-Federal unemployment taxes
D-All of these

D-All of these

Which of the following accounting principles best describes the rationale for reporting a liability for earned but unused compensated absences?
a. Full disclosure
b. Historical cost
c. Materiality
d. Matching

D-Matching

Which of the following statements characterizes defined benefit plans?
A-Retirement benefits depend on how well pension fund assets have been managed.
B-They are comparatively simple in construction and raise few accounting issues for employers.
C-Retirement benefits are based on the plan's benefit formula.
D-All of these

D-All of these

Washington Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to 10 percent of Washington's income in excess of $100,000 before deducting income tax but after deducting bonus. If income before income tax and bonus is $320,000 and the effective tax rate is 40 percent, the amount of the bonus should be
a. $22,000.
b. $20,000.
c. $32,000.
d. $44,000.

b-$20,000

Which of the following statements characterizes defined contribution plans?
A-They are more complex in construction than defined benefit plans.
B-Contributions are made in equal amounts by employer and employees.
C-The employer's obligation is satisfied by making the appropriate amount of periodic contribution.
D-The investment risk is borne by the employer.

C-The employer's obligation is satisfied by making the appropriate amount of periodic contribution.

The vested benefits of an employee in a pension plan represent benefits
A-to be paid from funds currently in the hands of an independent trustee.
B-to be paid to the retired employee in subsequent years.
C-that are not contingent on the employee's continuing in the service of the employer.
D-to be paid to the retired employee in the current year.

C-that are not contingent on the employee's continuing in the service of the employer.

Which of the following is not an issue in accounting for defined benefit plans?
A-The amount of pension liability to be reported
B-The amount of funding (contributions) required by the plan
C-Disclosures needed to supplement the financial statements
D-The amount of pension expense to be recognized

B- The amount of funding(contributions) required by the plan

The projected benefit obligation is the measure of pension obligation that
A-is not an allowable estimate for reporting the service cost component of pension expense for defined benefit plans.
B-can no longer be used under GAAP as an estimate for reporting the service cost component of pension expense.
C-is one of several allowable estimates for reporting the service cost component of pension expense.
D-is the only allowable estimate for reporting the service cost component of pension expense.

D-Is the only allowable estimate for reporting the service cost component of pension expense.

The disclosure required for postretirement benefit plans includes all requirements for pension plans plus:
A-information about health cost trend assumptions and sensitivity analysis of how postretirement expenses and the postretirement obligation would vary if the health care costs trend rate were increased by 1%.
B-information about how the company's plan compares to Medicare equivalents.
C-sensitivity analysis of how reducing postretirement obligations would impact the company's hiring process.
D-None of these are correct.

A-information about health cost trend assumptions and sensitivity analysis of how postretirement expenses and the postretirement obligation would vary if the health care costs trend rate were increased by 1%.

The interest cost component for other postretirement benefits is determined using
A-the rate of return on high quality fixed-income investments with cash flows matching the timing and amounts of expected benefit payments.
B-the settlement rate of interest.
C-both of these.
D-neither of these.

C-Both of these

Accounting 17 - Subjecto.com

Accounting 17

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1. Which of the following taxes is not included in the payroll tax expense of the employer?
Which of the following taxes is not included in the payroll tax expense of the employer?
A-State unemployment taxes
B-FICA taxes
C-Federal income taxes
D-Federal unemployment taxes

C-Federal Income Taxes

Vacation Pay-$110,000
Sick Pay-$80,000

In its December 31 balance sheet, what amount should Morgan report as its liability for compensated absences?
A-$0
B-$80,000
C-$110,000
D-$190,000

D-$190,000

Evans Inc., pays its managers a bonus consisting of 7% of net income (income after deduction of both bonus and income taxes). The company’s income tax rate is 20%. Income for the current year is $600,000.

How much bonus would be paid for the current year (rounded to whole dollars)?
A-$31,248
B-$31,818
C-$33,600
D-$42,000

B-$31,818

Dorman Corporation has an incentive compensation plan under which the sales manager receives a bonus equal to 10% of the company’s income after deducting income taxes but before deducting the bonus. Income before income tax and the bonus is $80,000. The effective income tax rate is 40%. How much is the bonus?
A-$4,800
B- $5,000
C-$8,000
D-$4,320

B-$5,000 .10 ($80,000 – T); T = .40 ($80,000 – B); Substitute T in the Bonus equation: B = .10 ($80,000 – .40 ($80,000 – B); B = $5,000

Which of the following payroll taxes are paid by the employer?
Which of the following payroll taxes are paid by the employer?
A-FICA taxes
B-State unemployment taxes
C-Federal unemployment taxes
D-All of these

D-All of these

Which of the following accounting principles best describes the rationale for reporting a liability for earned but unused compensated absences?
a. Full disclosure
b. Historical cost
c. Materiality
d. Matching

D-Matching

Which of the following statements characterizes defined benefit plans?
A-Retirement benefits depend on how well pension fund assets have been managed.
B-They are comparatively simple in construction and raise few accounting issues for employers.
C-Retirement benefits are based on the plan’s benefit formula.
D-All of these

D-All of these

Washington Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to 10 percent of Washington’s income in excess of $100,000 before deducting income tax but after deducting bonus. If income before income tax and bonus is $320,000 and the effective tax rate is 40 percent, the amount of the bonus should be
a. $22,000.
b. $20,000.
c. $32,000.
d. $44,000.

b-$20,000

Which of the following statements characterizes defined contribution plans?
A-They are more complex in construction than defined benefit plans.
B-Contributions are made in equal amounts by employer and employees.
C-The employer’s obligation is satisfied by making the appropriate amount of periodic contribution.
D-The investment risk is borne by the employer.

C-The employer’s obligation is satisfied by making the appropriate amount of periodic contribution.

The vested benefits of an employee in a pension plan represent benefits
A-to be paid from funds currently in the hands of an independent trustee.
B-to be paid to the retired employee in subsequent years.
C-that are not contingent on the employee’s continuing in the service of the employer.
D-to be paid to the retired employee in the current year.

C-that are not contingent on the employee’s continuing in the service of the employer.

Which of the following is not an issue in accounting for defined benefit plans?
A-The amount of pension liability to be reported
B-The amount of funding (contributions) required by the plan
C-Disclosures needed to supplement the financial statements
D-The amount of pension expense to be recognized

B- The amount of funding(contributions) required by the plan

The projected benefit obligation is the measure of pension obligation that
A-is not an allowable estimate for reporting the service cost component of pension expense for defined benefit plans.
B-can no longer be used under GAAP as an estimate for reporting the service cost component of pension expense.
C-is one of several allowable estimates for reporting the service cost component of pension expense.
D-is the only allowable estimate for reporting the service cost component of pension expense.

D-Is the only allowable estimate for reporting the service cost component of pension expense.

The disclosure required for postretirement benefit plans includes all requirements for pension plans plus:
A-information about health cost trend assumptions and sensitivity analysis of how postretirement expenses and the postretirement obligation would vary if the health care costs trend rate were increased by 1%.
B-information about how the company’s plan compares to Medicare equivalents.
C-sensitivity analysis of how reducing postretirement obligations would impact the company’s hiring process.
D-None of these are correct.

A-information about health cost trend assumptions and sensitivity analysis of how postretirement expenses and the postretirement obligation would vary if the health care costs trend rate were increased by 1%.

The interest cost component for other postretirement benefits is determined using
A-the rate of return on high quality fixed-income investments with cash flows matching the timing and amounts of expected benefit payments.
B-the settlement rate of interest.
C-both of these.
D-neither of these.

C-Both of these

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