Question 1

Income tax payable represents the amount of taxes that a corporation owes but has not yet paid.

Accepted Answer

Income tax payable is a liability on the balance sheet representing the amount of taxes that a corporation owes but has not yet paid.

Question 2

Sales tax is an expense of the business.

Accepted Answer

Sales tax is a current liability.

Question 3

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 those obligations that are expected to be paid within one year or within the operating cycle, if longer than a year. They are typically settled with cash, goods, or services.

Question 4

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

Accepted Answer

Amounts owed for products or services purchased on account are referred to as accounts payable. Accounts receivable represent amounts owed to a company by its customers for products or services sold on account.

Question 5

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

Accepted Answer

When tax is collected on retail sales, the seller credits the Sales Tax Payable account. This account tracks the amount of sales tax the business has collected from customers but has not yet remitted to the government.

Question 6

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

Accepted Answer

A current liability creates a present obligation for future payment of cash or services.

Question 7

The federal government is the only entity that requires corporations to pay income tax on their net income.

Accepted Answer

The federal government and many state governments require corporations to pay income tax on their net income

Question 8

Barron,Inc.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?

Accepted Answer

A)
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Question 9

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

Accepted Answer

Amounts owed for products or services purchased on account are called accounts payable. Unearned revenue refers to payment received in advance for goods or services that have not yet been delivered or performed. Accrued expenses refer to expenses that have been incurred but have not yet been paid. Warranty payable refers to the amount of money a company owes for warranties it has issued to customers.

Question 10

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, which varies depending on the state or location where the sale takes place.

Question 11

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. )

Accepted Answer

A)
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Question 12

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

Accepted Answer

This is the correct treatment of a long-term liability that has a portion due within the next year. It is reported as a current liability on the balance sheet.

Question 13

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

Accepted Answer

When paying off sales tax payable, the company would debit (decrease) the Sales Tax Payable account to reflect the payment of the liability.

Question 14

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?

Accepted Answer

D)
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Question 15

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

Accepted Answer

B)
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Question 16

Restaurant Foods Corp.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 Corp.had cash sales of $598,000...

Question 17

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 18

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 19

Which of the following statements regarding Accounts Payable is incorrect?

Accepted Answer

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

Question 20

Modern Age,Inc.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,Inc.made total cash sales in February...

Quiz 11: Current Liabilities and Payroll