Podcast
Questions and Answers
Which of the following is an example of a current liability in the form of payables?
Which of the following is an example of a current liability in the form of payables?
- Gift Cards
- Sales Taxes Payable (correct)
- Guarantee
- Assurance-Type Warranty
What is an example of unearned revenue?
What is an example of unearned revenue?
- Unearned Ticket Revenue (correct)
- Warranties
- Income Taxes Payable
- Vacation Pay
Which of the following is an example of a loss contingency?
Which of the following is an example of a loss contingency?
- Interest-Bearing Note Payable
- Lawsuit (correct)
- Employee-Related Liabilities
- Vacation Pay
What is the nature of liabilities?
What is the nature of liabilities?
What are typical current liabilities?
What are typical current liabilities?
What are notes payable?
What are notes payable?
What is the purpose of discount on notes payable?
What is the purpose of discount on notes payable?
What are customer advances and deposits?
What are customer advances and deposits?
What are income taxes payable based on?
What are income taxes payable based on?
What is the FICA tax rate currently based on the employee's gross pay?
What is the FICA tax rate currently based on the employee's gross pay?
Who pays the Hospital Insurance tax?
Who pays the Hospital Insurance tax?
What is the rate of the Federal Unemployment Tax Act (FUTA) paid by employers?
What is the rate of the Federal Unemployment Tax Act (FUTA) paid by employers?
Who receives a tax credit under the Federal Unemployment Tax Act (FUTA)?
Who receives a tax credit under the Federal Unemployment Tax Act (FUTA)?
What are compensated absences?
What are compensated absences?
What are bonus agreements in the context of employment?
What are bonus agreements in the context of employment?
What is a gain contingency?
What is a gain contingency?
What is the Medicare program designed to alleviate?
What is the Medicare program designed to alleviate?
What is the OASDI tax commonly referred to as?
What is the OASDI tax commonly referred to as?
What is the rate of the Hospital Insurance tax paid by both employee and employer?
What is the rate of the Hospital Insurance tax paid by both employee and employer?
Who is responsible for withholding income tax from employees’ pay?
Who is responsible for withholding income tax from employees’ pay?
In which situations are employers paid absences for vacation, illness, and holidays considered?
In which situations are employers paid absences for vacation, illness, and holidays considered?
What is the Federal Unemployment Tax Act (FUTA) paid only by?
What is the Federal Unemployment Tax Act (FUTA) paid only by?
Which tax is paid by both employee and employer at the rate of 1.45 percent on the employee’s total compensation?
Which tax is paid by both employee and employer at the rate of 1.45 percent on the employee’s total compensation?
What is the rate at which Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the rate at which Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the responsibility of employers regarding income tax?
What is the responsibility of employers regarding income tax?
What are compensated absences?
What are compensated absences?
What do bonus agreements entail?
What do bonus agreements entail?
What is a gain contingency related to?
What is a gain contingency related to?
Which of the following is an example of a current liability in the form of unearned revenues?
Which of the following is an example of a current liability in the form of unearned revenues?
What is the accounting treatment for a gain contingency?
What is the accounting treatment for a gain contingency?
Which of the following represents a gain contingency?
Which of the following represents a gain contingency?
What does the term 'current liabilities' refer to?
What does the term 'current liabilities' refer to?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
Who pays the Federal Unemployment Tax Act (FUTA)?
Who pays the Federal Unemployment Tax Act (FUTA)?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What are compensated absences in the context of employment?
What are compensated absences in the context of employment?
What is the OASDI tax commonly referred to as?
What is the OASDI tax commonly referred to as?
What is the rate at which the Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the rate at which the Federal Unemployment Tax Act (FUTA) is paid by employers?
Who is responsible for withholding income tax from employees’ pay?
Who is responsible for withholding income tax from employees’ pay?
What do bonus agreements entail in the context of employment?
What do bonus agreements entail in the context of employment?
What are typical gain contingencies related to?
What are typical gain contingencies related to?
What is the nature of compensated absences?
What is the nature of compensated absences?
Who pays the Hospital Insurance tax?
Who pays the Hospital Insurance tax?
What is the rate of the Federal Unemployment Tax Act (FUTA) tax credit to the federal government?
What is the rate of the Federal Unemployment Tax Act (FUTA) tax credit to the federal government?
Which of the following is a contra account to notes payable, representing the cost of borrowing?
Which of the following is a contra account to notes payable, representing the cost of borrowing?
What is the time between acquiring goods and services and realizing cash from sales and subsequent collections called?
What is the time between acquiring goods and services and realizing cash from sales and subsequent collections called?
What are returnable cash deposits received to guarantee performance or cover future obligations called?
What are returnable cash deposits received to guarantee performance or cover future obligations called?
What is the FICA tax rate currently based on the employee's gross pay up to a $142,800 annual limit?
What is the FICA tax rate currently based on the employee's gross pay up to a $142,800 annual limit?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term?
What are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term?
Which of the following is collected from customers and remitted to the government, with companies sometimes segregating the sales tax and sale amount or recording both in total sales revenue?
Which of the following is collected from customers and remitted to the government, with companies sometimes segregating the sales tax and sale amount or recording both in total sales revenue?
What are obligations expected to be settled using current assets or by creating other current liabilities called?
What are obligations expected to be settled using current assets or by creating other current liabilities called?
What are computed based on taxable income and tax rates, with differences between taxable and accounting income sometimes occurring?
What are computed based on taxable income and tax rates, with differences between taxable and accounting income sometimes occurring?
What is the rate of the FICA tax currently based on the employee's gross pay?
What is the rate of the FICA tax currently based on the employee's gross pay?
What is a returnable cash deposit received to guarantee performance or cover future obligations called?
What is a returnable cash deposit received to guarantee performance or cover future obligations called?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
Which of the following is an example of a zero-interest-bearing note?
Which of the following is an example of a zero-interest-bearing note?
What is the purpose of discount on notes payable?
What is the purpose of discount on notes payable?
What are typical gain contingencies related to?
What are typical gain contingencies related to?
What is the nature of compensated absences?
What is the nature of compensated absences?
What is the contra account to notes payable, representing the cost of borrowing?
What is the contra account to notes payable, representing the cost of borrowing?
What are returnable cash deposits received to guarantee performance or cover future obligations called?
What are returnable cash deposits received to guarantee performance or cover future obligations called?
What are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term?
What are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term?
What is the nature of compensated absences?
What is the nature of compensated absences?
What are typical current liabilities?
What are typical current liabilities?
What is the FICA tax rate currently based on the employee's gross pay up to a $142,800 annual limit?
What is the FICA tax rate currently based on the employee's gross pay up to a $142,800 annual limit?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the accounting treatment for a gain contingency?
What is the accounting treatment for a gain contingency?
What are obligations expected to be settled using current assets or by creating other current liabilities called?
What are obligations expected to be settled using current assets or by creating other current liabilities called?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What is the Medicare program designed to alleviate?
What is the Medicare program designed to alleviate?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
What is the rate at which Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the rate at which Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the rate at which the Federal Unemployment Tax Act (FUTA) tax credit is received by employers if subject to a state unemployment tax of 5.2% or more?
What is the rate at which the Federal Unemployment Tax Act (FUTA) tax credit is received by employers if subject to a state unemployment tax of 5.2% or more?
What are compensated absences in the context of employment?
What are compensated absences in the context of employment?
What are bonus agreements in the context of employment?
What are bonus agreements in the context of employment?
What is the OASDI tax commonly referred to as?
What is the OASDI tax commonly referred to as?
What is the nature of liabilities?
What is the nature of liabilities?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What are customer advances and deposits?
What are customer advances and deposits?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the time between acquiring goods and services and realizing cash from sales and subsequent collections called?
What is the time between acquiring goods and services and realizing cash from sales and subsequent collections called?
What are notes payable?
What are notes payable?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
What is the rate of the Hospital Insurance tax paid by both employee and employer on the employee’s total compensation?
What is the rate of the Federal Unemployment Tax Act (FUTA) tax credit to the federal government?
What is the rate of the Federal Unemployment Tax Act (FUTA) tax credit to the federal government?
What is the rate at which the Federal Unemployment Tax Act (FUTA) is paid by employers?
What is the rate at which the Federal Unemployment Tax Act (FUTA) is paid by employers?
What are compensated absences?
What are compensated absences?
What are bonus agreements in the context of employment?
What are bonus agreements in the context of employment?
What is the OASDI tax commonly referred to as?
What is the OASDI tax commonly referred to as?
What are typical gain contingencies related to?
What are typical gain contingencies related to?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the nature of liabilities?
What is the nature of liabilities?
What is the responsibility of employers regarding income tax?
What is the responsibility of employers regarding income tax?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
What are payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues considered as?
What is the Medicare program designed to alleviate?
What is the Medicare program designed to alleviate?
What is the rate of the Federal Unemployment Tax Act (FUTA) paid by employers?
What is the rate of the Federal Unemployment Tax Act (FUTA) paid by employers?
What is the rate at which the Hospital Insurance tax is paid by both employee and employer on the employee’s total compensation?
What is the rate at which the Hospital Insurance tax is paid by both employee and employer on the employee’s total compensation?
Who pays the Federal Unemployment Tax Act (FUTA)?
Who pays the Federal Unemployment Tax Act (FUTA)?
What is the Medicare program designed to alleviate?
What is the Medicare program designed to alleviate?
What is the OASDI tax commonly referred to as?
What is the OASDI tax commonly referred to as?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
What is the purpose of the tax credit received by employers under the Federal Unemployment Tax Act (FUTA)?
Who is responsible for withholding income tax from employees’ pay?
Who is responsible for withholding income tax from employees’ pay?
What are compensated absences?
What are compensated absences?
What are gain contingencies related to?
What are gain contingencies related to?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What is the category of balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period?
What are bonus agreements in the context of employment?
What are bonus agreements in the context of employment?
What are typical gain contingencies related to?
What are typical gain contingencies related to?
Study Notes
Payroll Deductions and Employee-Related Liabilities
- In 1965, Congress passed the first federal health insurance program for the aged—popularly known as Medicare.
- Medicare alleviates high cost of medical care for those over age 65.
- Hospital Insurance tax, paid by both employee and employer at the rate of 1.45 percent on the employee’s total compensation.
- OASDI tax (FICA) and the federal Hospital Insurance Tax is referred to as the Social Security tax.
- Federal Unemployment Tax Act (FUTA) is paid only by employers at a rate of 6 percent on the first $7,000 of compensation paid to each employee during the calendar year.
- Employers receive a tax credit if subject to a state unemployment tax of 5.2 percent or more and pays only 0.8 percent tax to the federal government.
- Employers must refer to the unemployment tax laws in each state in which they pay wages and salaries.
- Employers are responsible for withholding income tax from employees’ pay.
- Employers report these amounts as liabilities until remitted.
- Compensated absences are paid absences for vacation, illness, and holidays.
- Bonus agreements are payments to certain or all employees in addition to their regular salaries or wages.
- Contingencies involve uncertainty as to possible gain or loss to an enterprise, with typical gain contingencies including possible receipts of monies from gifts, donations, asset sales, and so on.
Current Liabilities and Their Types
- Current liabilities are obligations expected to be settled using current assets or by creating other current liabilities.
- The operating cycle is the time between acquiring goods and services and realizing cash from sales and subsequent collections.
- Typical current liabilities include accounts payable, notes payable, dividends payable, customer advances and deposits, unearned revenues, sales taxes payable, income taxes payable, and employee-related liabilities.
- Accounts payable are balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period.
- Notes payable are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term.
- Interest-bearing notes involve interest expense recognition and payment at maturity, while zero-interest-bearing notes involve upfront interest charges.
- Discount on notes payable is a contra account to notes payable, representing the cost of borrowing.
- Customer advances and deposits are returnable cash deposits received to guarantee performance or cover future obligations.
- Sales taxes payable are collected from customers and remitted to the government, with companies sometimes segregating the sales tax and sale amount or recording both in total sales revenue.
- Income taxes payable are computed based on taxable income and tax rates, with differences between taxable and accounting income sometimes occurring.
- Employee-related liabilities include payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues.
- The FICA tax rate is currently 6.2% based on the employee's gross pay up to a $142,800 annual limit.
Current Liabilities and Their Types
- Current liabilities are obligations expected to be settled using current assets or by creating other current liabilities.
- The operating cycle is the time between acquiring goods and services and realizing cash from sales and subsequent collections.
- Typical current liabilities include accounts payable, notes payable, dividends payable, customer advances and deposits, unearned revenues, sales taxes payable, income taxes payable, and employee-related liabilities.
- Accounts payable are balances owed for goods, supplies, or services purchased on open account, with commonly 30 to 60 days credit period.
- Notes payable are written promises to pay a certain sum of money on a specified future date, classified as short-term or long-term.
- Interest-bearing notes involve interest expense recognition and payment at maturity, while zero-interest-bearing notes involve upfront interest charges.
- Discount on notes payable is a contra account to notes payable, representing the cost of borrowing.
- Customer advances and deposits are returnable cash deposits received to guarantee performance or cover future obligations.
- Sales taxes payable are collected from customers and remitted to the government, with companies sometimes segregating the sales tax and sale amount or recording both in total sales revenue.
- Income taxes payable are computed based on taxable income and tax rates, with differences between taxable and accounting income sometimes occurring.
- Employee-related liabilities include payroll deductions such as social security taxes (FICA), insurance premiums, employee savings, and union dues.
- The FICA tax rate is currently 6.2% based on the employee's gross pay up to a $142,800 annual limit.
Payroll Deductions and Employee-Related Liabilities
- In 1965, Congress passed the first federal health insurance program for the aged—popularly known as Medicare.
- Medicare alleviates high cost of medical care for those over age 65.
- Hospital Insurance tax, paid by both employee and employer at the rate of 1.45 percent on the employee’s total compensation.
- OASDI tax (FICA) and the federal Hospital Insurance Tax is referred to as the Social Security tax.
- Federal Unemployment Tax Act (FUTA) is paid only by employers at a rate of 6 percent on the first $7,000 of compensation paid to each employee during the calendar year.
- Employers receive a tax credit if subject to a state unemployment tax of 5.2 percent or more and pays only 0.8 percent tax to the federal government.
- Employers must refer to the unemployment tax laws in each state in which they pay wages and salaries.
- Employers are responsible for withholding income tax from employees’ pay.
- Employers report these amounts as liabilities until remitted.
- Compensated absences are paid absences for vacation, illness, and holidays.
- Bonus agreements are payments to certain or all employees in addition to their regular salaries or wages.
- Contingencies involve uncertainty as to possible gain or loss to an enterprise, with typical gain contingencies including possible receipts of monies from gifts, donations, asset sales, and so on.
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Description
Test your knowledge of current liabilities and employee-related liabilities with this quiz. Explore types of current liabilities such as accounts payable, notes payable, and customer advances, as well as employee-related liabilities like payroll deductions, FICA tax, and Medicare.
