Understanding Liabilities: Types and Records

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Questions and Answers

Match the following terms with their definitions related to liabilities:

Contingent Liability = A potential liability that depends on a possible future event Current Liability = A liability that must be paid within one year or the entity's operating cycle Long-Term Liability = A liability that does not need to be paid within one year or one operating cycle Definitely Determinable Liabilities = Liabilities with prices that are always exact, never estimates

Match the payroll-related terms with their descriptions:

Gross Pay = The total compensation before deductions Net Pay = Gross pay minus all deductions Income Tax Withholding = Income tax deducted from an employee's gross pay Social Security (FICA) Tax = Tax withheld from employees' pay and matched by the employer

Match the forms with their purpose in payroll and tax reporting:

W-2 Form = Shows income earned and taxes withheld, provided to employees and the IRS W-4 Form = Indicates allowances claimed for income tax withholding, filed with employer Payroll Register = Summarizes earnings, withholdings, and net pay for each employee Employee Earnings Record = Tracks an employee's compensation and deductions for a pay period

Match each form with its correct description:

W-2 = Reports annual wages and taxes withheld. W-4 = Determines the amount of taxes withheld from an employee's paycheck. Payroll Register = Summarizes employee earnings and deductions for a specific period. Employee Earnings Record = Tracks an employee's pay history. Signup and view all the answers

Match the following concepts with their descriptions:

Pension Plan = A plan that provides benefits to retired employees Unemployment Compensation Tax = Tax paid by employers to fund unemployment benefits Federal Insurance Contributions Act (FICA) = The act that created Social Security and Medicare taxes Warranty = Agreement that guarantees a company's product against defects Signup and view all the answers

Match the financial ratios with what they measure.

Times-Interest-Earned Ratio = Ability to pay interest expense Current Ratio = Ability to pay short-term obligations Debt to Assets Ratio = Percentage of assets financed by debt Return on Equity = Profitability relative to shareholders' investment Signup and view all the answers

Match the type of payroll deductions with their explanation.

Mandatory Deductions = Required by law, such as FICA and income tax. Voluntary Deductions = Elected by the employee, such as health insurance. Pre-tax Deductions = Deductions taken before taxes are calculated, reducing taxable income. Post-tax Deductions = Deductions taken after taxes are calculated. Signup and view all the answers

Match the following liability types with their examples:

Current Liability = Accounts Payable Long-Term Liability = Mortgage Payable Contingent Liability = Potential Lawsuit Deferred Revenue = Payment for services not yet performed Signup and view all the answers

Match the liability term with it's description:

Current Portion of Notes Payable = The principal amount of a note that will be paid within one year Short-Term Note Payable = A written promise made by the business to pay a debt usually with interest, within one year Accounts Payable = Amounts owed to suppliers for goods or services purchased on credit Accrued Expenses = Expenses that have been incurred but not yet paid Signup and view all the answers

Match the descriptions to the payroll related documents:

W-2 Form = Summary of annual earnings and deductions. W-4 Form = Employee's withholding certificate. Form 941 = Employer’s quarterly federal tax return. Form 940 = Employer’s annual federal unemployment tax return. Signup and view all the answers

Match the following types of employee compensation with their descriptions:

Salaries = Fixed compensation paid on a regular basis. Wages = Compensation based on hours worked. Commissions = Compensation based on a percentage of sales. Bonuses = Additional compensation based on performance. Signup and view all the answers

Match the descriptions with the payroll tax types.

Social Security Tax = Funds retirement, disability, and survivor benefits. Medicare Tax = Funds healthcare benefits for seniors. Federal Income Tax = Tax withheld to fund federal government programs. State Income Tax = Tax withheld to fund state government programs. Signup and view all the answers

Match the payroll accounting terms with their definitions.

Gross Pay = Total earnings before deductions. Net Pay = Earnings after deductions. Payroll Tax Expense = Employer's share of payroll taxes. Payroll Liabilities = Amounts owed to employees and government agencies. Signup and view all the answers

Match the examples with types of employee benefits:

Health Insurance = Covers medical expenses. Retirement Plan = Provides income after retirement. Paid Time Off = Allows employees to take time off work. Life Insurance = Provides financial protection to beneficiaries. Signup and view all the answers

Match the descriptions to internal controls related to payroll.

Segregation of Duties = Different individuals handle payroll processing, recording, and reconciliation. Authorization = Payroll changes are approved by a manager. Reconciliation = Payroll records are compared with bank statements. Physical Controls = Restricting access to payroll systems and data. Signup and view all the answers

Match the descriptions of the different ways employers pay employees:

Direct Deposit = Funds are electronically transferred to the employee's bank account. Paper Check = A physical check is issued to the employee. Pay Card = Funds are loaded onto a debit card for the employee to use. Mobile Payment = Funds are transferred via a mobile app. Signup and view all the answers

Match the following liabilities with whether they are current or long-term:

Accounts Payable = Current Mortgage Payable = Long-Term Salaries Payable = Current Bonds Payable = Long-Term Signup and view all the answers

Match the descriptions of the different types of contingent liabilities:

Probable = Likely to occur and can be reasonably estimated. Reasonably Possible = More than remote but less than probable. Remote = Slight chance of occurring. Guarantee = Obligation to cover the debt of another party. Signup and view all the answers

Match the steps of payroll processing with their order:

Calculate Gross Pay = Determine employee's total earnings. Calculate Deductions = Determine amounts to withhold for taxes and benefits. Calculate Net Pay = Subtract deductions from gross pay. Record Payroll = Record payroll transactions in the accounting system. Signup and view all the answers

Explain the descriptions of the employer's payroll tax obligations:

Social Security Tax = Match employee's contribution. Medicare Tax = Match employee's contribution. Federal Unemployment Tax = Funds unemployment benefits at the federal level. State Unemployment Tax = Funds unemployment benefits at the state level. Signup and view all the answers

Match each role with its payroll responsibility:

HR Department = Maintains employee data and manages benefits. Accounting Department = Processes and records payroll transactions. Management = Authorizes payroll changes and approves time sheets. IT Department = Maintains payroll systems and data security. Signup and view all the answers

Explain the description of payroll audits:

Internal Audit = Conducted by the company's internal audit team. External Audit = Conducted by an independent auditor. Compliance Audit = Ensures compliance with tax laws and regulations. Operational Audit = Evaluates payroll processes for efficiency and effectiveness. Signup and view all the answers

Match the scenarios with how they affect employee benefits:

Termination = Benefits may cease or continue under COBRA. Promotion = May increase benefits or eligibility for new benefits. Leave of Absence = Benefits may continue, be suspended, or require employee contributions. Retirement = Transition to retirement benefits such as pension and Medicare. Signup and view all the answers

Match the following liability ratios to their correct formula:

Debt to Assets Ratio = Total Debt / Total Assets Debt to Equity Ratio = Total Debt / Total Equity Times Interest Earned = EBIT / Interest Expense Current Ratio = Current Assets / Current Liabilities Signup and view all the answers

Match the descriptions to common types of employee deductions:

Federal Income Tax = Withholding based on W-4 form and tax tables. State Income Tax = Withholding based on state regulations. Medicare Tax = 1.45% of gross pay. Social Security Tax = 6.2% of gross pay, up to annual wage base. Signup and view all the answers

Match each department with an example of a contingent liability that may arise from its function:

Sales = Warranty claims for defective products. Legal = Potential lawsuit settlements. Environmental = Costs to clean up pollution. Construction = Potential cost overruns. Signup and view all the answers

Match these payroll regulations with their description:

Fair Labor Standards Act (FLSA) = Sets minimum wage, overtime pay, and child labor standards. Family and Medical Leave Act (FMLA) = Provides unpaid, job-protected leave for family and medical reasons. Employee Retirement Income Security Act (ERISA) = Governs employee benefit plans. Equal Pay Act = Prohibits wage discrimination based on sex. Signup and view all the answers

Match the following scenarios with how they should be recorded as a liability:

Product Warranty = Record an estimated warranty liability. Pending Lawsuit = Record a contingent liability if probable and estimable. Customer Deposits = Record unearned revenue until service or product is provided. Outstanding Loan = Record current and long-term portions on the balance sheet. Signup and view all the answers

Match the steps in the accounting cycle with how they relate to payroll and liabilities:

Journalizing = Record payroll transactions including wages, taxes, and deductions. Posting = Transfer journal entries to the general ledger accounts. Adjusting Entries = Accrue for unpaid wages, taxes, and benefits at year-end. Financial Statements = Present liabilities such as accounts payable, wages payable, and deferred revenue. Signup and view all the answers

Match the following descriptions to their liability type:

Accounts Payable = Short-term obligations to suppliers. Salaries and Wages Payable = Amounts owed to employees for work performed. Unearned Revenue = Payments received for goods or services not yet delivered. Notes Payable = Formal written promises to repay a debt. Signup and view all the answers

Match the ratios with the financial aspect it indicates:

Current Ratio = Short-term liquidity. Quick Ratio = Immediate liquidity considering only the most liquid assets. Debt-to-Equity Ratio = Leverage or the extent of debt financing. Times Interest Earned = Ability to cover interest expenses from earnings. Signup and view all the answers

Match the following controls with risks related to payroll:

Segregation of Duties(Payroll) = Reduces risk of fraudulent payments. Independent Bank Reconciliation = Detects unauthorized transactions. Management Review = Ensures accuracy and completeness of payroll. Password Protection = Prevents unauthorized access to the payroll system. Signup and view all the answers

Match types of pension plans with their descriptions:

Defined Benefit Plan = Specifies the amount of pension benefit an employee will receive at retirement. Defined Contribution Plan = Specifies the amount of contributions the employer and/or employee will make to a retirement account. 401(k) Plan = A defined contribution plan where employees can elect to defer compensation. Employee Stock Ownership Plan (ESOP) = A plan that invests primarily in the employer's stock. Signup and view all the answers

Match descriptions to the processes for common wage garnishments:

Child Support = Deduction based on a court order. Tax Levy = Deduction to satisfy unpaid taxes. Student Loan = Deduction for defaulted student loans. Credit Card Debt = Wage garnishment due to unpaid credit card debt. Signup and view all the answers

Match the following government agencies/entities with their roles in payroll:

Internal Revenue Service (IRS) = Enforces federal tax laws. Social Security Administration (SSA) = Administers Social Security benefits. Department of Labor (DOL) = Enforces labor laws, including wage and hour standards. State Revenue Agencies = Enforce state tax laws. Signup and view all the answers

Match the descriptions with the different kinds of audits:

Financial Statement Audit = Evaluates whether financial statements are fairly presented in accordance with GAAP. Tax Audit = Examines tax returns for accuracy. Compliance Audit = Verifies adherence to regulations. Operational Audit = Assesses the efficiency and effectiveness of operations. Signup and view all the answers

Match each liability with its reporting timescale:

Unearned Revenue = Recognized as revenue when earned. Warranty Liability = Accrued when the product is sold. Contingent Litigation Liability = Disclosed in footnotes if reasonably possible. Bond Payable = Amortized over its life to reflect market interest rates. Signup and view all the answers

Match the accounting terms to their descriptions:

Accrual Accounting = Recognizes revenues when earned and expenses when incurred. Cash Basis Accounting = Recognizes revenues when cash is received and expenses when cash is paid. Matching Principle = Matches expenses with revenues in the same period. Conservatism Principle = Recognize losses when probable, but delay recognizing gains. Signup and view all the answers

Match the following liability types with their defining characteristic:

Contingent Liability = Depends on a possible future event. Current Liability = Must be paid within one year or the operating cycle. Long-Term Liability = Not due within one year or one operating cycle. Definitely Determinable Liabilities = Always exact, never estimates Signup and view all the answers

Match the terms with their definitions regarding employee compensation:

Gross Pay = Total compensation before deductions. Net Pay = Gross pay minus all deductions. Income Tax Withholding = Income tax deducted from gross pay. Social Security (FICA) Tax = Tax for retirement, disability, and medicare benefits. Signup and view all the answers

Match the tax-related terms with their correct descriptions:

Social Security (FICA) Tax = Provides retirement, disability, and medicare benefits. Income Tax Withholding = Deducted from an employee's gross pay. Unemployment Compensation Tax = Paid by employers for unemployment benefits. Federal Insurance Contributions Act (FICA) = Created the Social Security tax. Signup and view all the answers

Match the forms and records with their purpose:

W-2 Form = Shows income earned and taxes withheld. W-4 Form = Indicates allowances claimed for income tax withholding. Employee Earnings Record = Tracks compensation and deductions for a pay period. Payroll Register = Summarizes earnings, withholdings, and net pay for each employee. Signup and view all the answers

Match the following types of liabilities with their examples:

Current Portion of Notes Payable = Principal amount of a note due within a year. Short-Term Note Payable = Written promise to pay a debt with interest within a year. Contingent Liability = Potential obligation from a past event. Warranty = Guarantee against product defects. Signup and view all the answers

Match the financial terms with their correct formulas:

Times-Interest-Earned Ratio = $(Net Income + Income Tax Expense + Interest Expense) / Interest Expense$ Gross Pay = Total compensation. Net Pay = Gross pay - all deductions Social Security Tax = Percentage of employee wages Signup and view all the answers

Match the terms with their effect on a company's financial statements:

Contingent Liability = May or may not be recorded depending on probability. Current Liability = Recorded on balance sheet under current liabilities. Long-Term Liability = Recorded on balance sheet under long-term liabilities. Gross Pay = Affects the income statement through wage expense. Signup and view all the answers

Match the terms with their importance in financial analysis:

Times-Interest-Earned Ratio = Ability to cover interest payments. Current Liabilities = Short-term obligations. Long-Term Liabilities = Impact on long-term solvency. Contingent Liabilities = Potential future obligations. Signup and view all the answers

Match the items with the appropriate documents:

Gross Pay = Payroll Register Allowances Claimed = W-4 Form Yearly Earnings = W-2 Form Pay Period Deductions = Employee Earnings Record Signup and view all the answers

Match the liabilities with how they are generally satisfied:

Current Liability = Cash Payment Warranty = Repair or Replacement Short-Term Note Payable = Cash Payment with Interest Pension Plan = Periodic Payments after Retirement Signup and view all the answers

Match the terms with the descriptions most closely related to their impact on financial statements:

Gross Pay = Component of operating expenses. Net Pay = Amount actually paid to employees. Income Tax Withholding = Difference between gross and net pay. Social Security (FICA) Tax = Payroll tax expense for employers. Signup and view all the answers

Match the terms with what they directly influence:

W-4 Form = Employee's Income Tax Withholding W-2 Form = Employee's Tax Return Payroll Register = Financial statements Employee Earnings Record = Payroll tax returns Signup and view all the answers

Match the liability types with when they are typically recorded:

Current Liability = When the obligation is probable and measurable. Long-Term Liability = Upon agreement or incurrence. Contingent Liability = If the event is probable and the amount can be reasonably estimated. Warranty = At the point of sale. Signup and view all the answers

Match the types of deductions with their purpose:

Income Tax Withholding = Pay federal and state income taxes. Social Security (FICA) Tax = Fund retirement, disability, and Medicare benefits. Pension Plan = Save for retirement. Unemployment Compensation Tax = Fund benefits fir those out of work. Signup and view all the answers

Match the steps with their placement in the processes involved with payroll:

Gross Pay Calculation = Before taxes and other deductions. Deduction Calculation = After gross pay. Net Pay Calculation = After deductions. Tax Remittance = After net pay. Signup and view all the answers

Match the concepts with their use in financial analysis:

Current Liabilities = Liquidity assessment. Long-Term Liabilities = Solvency assessment. Times-Interest-Earned Ratio = Assessment of debt coverage. Unemployment Compensation Tax = Operating expense. Signup and view all the answers

Match the following liability scenarios with the most appropriate accounting treatment:

Warranty Claims = Estimated and accrued as expense. Short-Term Notes Payable = Recognized when the note is issued. Contingent Legal Liability = Disclosed if reasonably possible, accrued if probable and estimable. Pension Obligations = Actuarially determined and periodically updated. Signup and view all the answers

Match the key payroll tasks with their typical associated departments:

Calculating Gross Pay = Human Resources. Payroll Processing = Accounting Department. Tax Reporting = Tax Department. Benefit Administration = Human Resources. Signup and view all the answers

Match the ratio with its corresponding description:

Times-Interest-Earned Ratio = Measures the company's ability to cover interest expenses. Current Ratio = Measures a company’s ability to pay short-term obligations. Debt-to-Equity Ratio = Measures the proportion of debt and equity a company is using to finance its assets. Profit Margin = Measures how much out of every dollar of sales a company actually keeps in earnings. Signup and view all the answers

Match the descriptions to the appropriate terms:

W-2 = Reports prior year earnings. W-4 = Used to calculate withholdings. Payroll Register = Breakdown of payroll info. Earnings record = Summary of pay. Signup and view all the answers

Match the following accounting concepts with their relevance to liabilities and payroll:

Accrual Accounting = Recognizing liabilities when incurred, regardless of cash flow. Matching Principle = Matching payroll expenses with the period employees worked. Conservatism = Recognizing potential losses from contingent liabilities promptly. Going Concern = Assuming the business will continue operating and meet its obligations. Signup and view all the answers

Match each term with its correct application in accounting for liabilities:

Present Value = Used to measure long-term liabilities like bonds. Amortization = Allocation of discount or premium on bonds over their life. Fair Value = Used to value certain liabilities, especially derivatives. Contingency = Possible loss arising from past event. Signup and view all the answers

Match the liability to a business decision that might increase it:

Warranties = Increasing sales of products covered by warranties. Short-Term Notes Payable = Financing short-term operational needs. Pension Obligations = Offering more generous retirement benefits. Contingent Liability = Engaging in a risky investment or defending a lawsuit. Signup and view all the answers

Match the scenario with the financial reporting implication:

Lawsuit filed against company = Disclose if reasonably possible, accrue if probable and estimable. Employee bonus plan = Accrue bonus expense as employees earn it. Product recall = Estimate and accrue warranty liability. Debt covenant violation = Reclassify long-term debt as current if likely the covenant will not be met. Signup and view all the answers

Match the items to how they appear on the financial statements:

Gross Pay = Income Statement as an expense. Net Pay = Not directly on financial statements. Income Tax Withholding = Balance Sheet as a liability until remitted. Social Security (FICA) Tax = Income Statement as payroll tax expense and Balance Sheet as liability Signup and view all the answers

Match the scenario with how it changes the company's financial statements or situation:

Company issues debt = Increases both assets and liabilities. Company makes payment on short-term payable = Decreases assets and liabilities. Company determines warranty expectations = Impacts what is disclosed. Company restructures long-term debt = Solvency may be improved. Signup and view all the answers

Match the financial ratios with what the ratio measures:

Times-Interest-Earned Ratio = Ability to pay interest expense. Current Ratio = Ability to meet short term obligations. Quick Ratio = Ability to meet short term obligations with quick assets. Debt-to-Asset Ratio = Extent financed by debt. Signup and view all the answers

Match the following terms to their accounting use case:

Pension Plan = Post-retirement benefits to employees. Unemployment Compensation = Payments to employees who are out of work. Social Security = Retirement, disability, and Medicare programs. Workers' Compensation = Benefits to workers who are injured on the job. Signup and view all the answers

Match the account entry with the proper situation:

Debit Cash, Credit Notes Payable = Borrowing money from a bank. Debit Wages Expense, Credit Cash = Paying employees their salaries. Debit Warranty Expense, Credit Warranty Liability = Estimating future warranty claims. Debit Interest Expense, Credit Interest Payable = Accruing interest expense at year-end. Signup and view all the answers

Match the description with their document:

Employee's withholding certificate = W-4 Form Annual earnings and tax summary = W-2 Form Summary of payroll for each period = Payroll Register Detail of an individual employee's pay = Employee Earnings Record Signup and view all the answers

Match scenarios with their classification:

A pending lawsuit with a possible but not probable loss = Contingent Liability Salaries owed to employees at the end of the month = Accrued expense A note payable due within the next year = Current Liability Bonds payable due in 10 years = Long term liability Signup and view all the answers

Match the description with an action to mitigate its effect:

Possible lawsuit = Consult legal counsel. Cash flow problems = Secure line of credit. Employee turnover = Improve employee benefits. Warranty claims = Improve product quality. Signup and view all the answers

Match the ratio to its meaning:

Times-Interest-Earned Ratio = Whether income covers interest. Current Ratio = Meet short-term obligations. Debt-to-Equity Ratio = Degree leveraging Inventory turnover = How efficiently inventory turns to sales. Signup and view all the answers

Match the correct formula with its use:

Net income + Interest Expense + Income Tax Expense / Interest Expense = Times Interest Earned Ratio Current Assets/Current Liabilities = Current Ratio (Current Assets - Inventory)/Current Liabilities = Quick Ratio Total Debt / Stockholders' Equity = Debt to Equity Ratio Signup and view all the answers

Match a control and its corresponding risk:

Segregation of Duties = Prevents theft or fraud. Review and approval = Prevents errors Bank reconciliation = Assures money is accounted for Limit physical access = Theft is harder Signup and view all the answers

Match each of payroll's impact on the financial statement, so long as all things payroll are held constant:

Increase in salaries = Decreased net income Tax increase = Decreased net income New piece of equipment = No change in net come New Debt = No change in net income Signup and view all the answers

Match the definition with the appropriate term::

The total amount of salary earned. = Gross Pay What's left over once all deductions or taxes have happened. = Net Pay Salary paid to employees. = Salaries Expense Expense paid to the government. = Unemployment Expense Signup and view all the answers

Match the term with when it becomes a loss:

Lawsuit = When settlement is reached. Bankruptcy = Confirmed by the court. Lost sale = When the period is over. Contract = After litigation. Signup and view all the answers

Match each liability type with its corresponding description:

Contingent Liability = A potential debt dependent on a future event's outcome. Current Liability = Obligation to be settled within one year or operating cycle. Long-Term Liability = Debt not due within the current year or operating cycle. Definitely Determinable Liabilities = Liabilities with exact amounts and due dates. Signup and view all the answers

Match the payroll-related term with its definition:

Gross Pay = Total earnings before deductions. Net Pay = Earnings after all deductions. Income Tax Withholding = Taxes deducted from employees' earnings. Social Security Tax = Tax withheld and matched for retirement/disability benefits. Signup and view all the answers

Match each tax-related term to its description:

Social Security (FICA) Tax = Funds retirement, disability, and Medicare benefits. Unemployment Compensation Tax = Employer-paid tax for unemployment benefits. Income Tax Withholding = Deduction for an employee's federal income taxes. Federal Insurance Contributions Act (FICA) = Federal act that created the Social Security tax Signup and view all the answers

Match the form with its purpose in payroll and tax reporting:

W-2 Form = Reports annual earnings and withholdings to employees and the IRS. W-4 Form = Informs employer of employee's withholding allowances. Payroll Register = Summarizes earnings, withholdings, and net pay for all employees. Employee Earnings Record = Tracks an individual employee's compensation and deductions. Signup and view all the answers

Match the accounting term with its definition:

Current Portion of Notes Payable = Principal due within one year. Short-Term Note Payable = Debt instrument due within one year, usually with interest. Warranty = Guarantee against product defects. Pension Plan = Retirement benefit plan for employees. Signup and view all the answers

Match each concept with its appropriate description:

Liabilities = Amounts owed to creditors. Contingent Liability = A liability that may occur depending on the outcome of an event. Net Pay = Amount of pay an employee receives after deductions. Gross Pay = Total earnings before deductions. Signup and view all the answers

Match the term to its definition:

Payroll Register = A summary of earnings, withholdings, and net pay for employees. W-2 Form = Reports income earned from an employer from an employee. W-4 Form = Indicates the amount of allowances claimed for income tax withholding. Employee Earnings Record = Tracks an employee's compensation and deductions for a pay period Signup and view all the answers

Match the liability with its payment timeline:

Long-Term Liability = Due beyond one year or operating cycle. Current Liability = Due within one year or operating cycle. Short-Term Note Payable = Usually due within one year, with interest. Current Portion of Notes Payable = The current amount of a long-term liability due. Signup and view all the answers

Match the concept with its accounting treatment:

Warranty = Recognize expense and liability when product is sold. Unemployment Compensation Tax = Expense recognized and liability recorded when paying wages. Contingent Liability = Disclose if reasonably possible, record if probable and estimable. Pension Plan = Record expense based on employee service. Signup and view all the answers

Match the item with its effect on an employees' net pay:

Gross Pay = Increase net pay. Income Tax Withholding = Decrease net pay. Social Security (FICA) Tax = Decrease net pay. Pension Plan Contributions = Decrease net pay. Signup and view all the answers

Match the item with its correct definition or characteristic:

Times-Interest-Earned Ratio = A measure of a company's ability to cover its interest expense. Contingent Liability = Potential obligation depending on a future event. Short-Term Note Payable = Debt instrument due within one year. Pension Plan = Plan providing benefits to retired employees. Signup and view all the answers

Match the withholding or liability with the responsible party:

Income Tax Withholding = Employee responsibility; employer remits. Social Security (FICA) Tax = Both employer and employee share the tax burden. Unemployment Compensation Tax = Solely employer's responsibility. Pension Plan Contributions = Potentially both employee and employer. Signup and view all the answers

Relate these terms to the financial statements where they most commonly appear:

Current Liabilities = Balance Sheet. Income Tax Withholding = Balance Sheet. Warranty Expense = Income Statement. Times-Interest-Earned Ratio = Financial Statement Analysis. Signup and view all the answers

Connect the account with its balance type:

Liabilities = Credit balance. Warranty Expense = Debit balance. Income Tax Withholding Payable = Credit balance. Unemployment Compensation Tax Expense = Debit balance. Signup and view all the answers

Match each term with its relevance in the context of liabilities and payroll:

Definitely Determinable Liabilities = Easily quantifiable; little estimation required. Contingent Liability = Disclosure needed if potential obligation. Times-Interest-Earned Ratio = Evaluates ability to meet interest obligations. Gross Pay = Starting point for all payroll calculations. Signup and view all the answers

Link each item with its impact on Taxes:

Gross Pay = Basis for withholding calculations. Income Tax Withholding = Reduces taxable income. Social Security (FICA) Tax = Mandatory payroll deduction. Unemployment Compensation Tax = Employer payroll tax. Signup and view all the answers

Match the form or record with its processing frequency:

W-4 Form = Completed by employee upon hire or when allowances change. Payroll Register = Prepared each pay period. W-2 Form = Prepared annually. Employee Earnings Record = Updated each pay period. Signup and view all the answers

Match each tax with the specific government level that primarily benefits from it:

Income Tax Withholding = Federal and State governments. Social Security (FICA) Tax = Federal government. Unemployment Compensation Tax = State governments. Federal Insurance Contributions Act (FICA) = Federal government. Signup and view all the answers

Match the item with who is impacted:

Gross Pay = Employee. Net Pay = Employee. Unemployment Compensation Tax = Employer. Pension Plan = Employee and Employer. Signup and view all the answers

Match the term with its role in financial analysis or management:

Times-Interest-Earned Ratio = Indicates if earnings are sufficient to cover interest expenses. Current Liabilities = Shows obligations due within the next year. Contingent Liability = Highlights potential future obligations. Pension Plan = Assessing the long-term financial commitments of an organization. Signup and view all the answers

Flashcards

Contingent Liability

A potential liability that depends on a possible future event

Current Liability

A liability that must be paid with goods, services or cash within one year or the entity's operating cycle

Current Portion of Notes Payable

The principal amount of a note that will be paid within one year

Federal Insurance Contributions Act (FICA)

The federal act that created the Social Security tax, which provides retirement, disability, and medicare benefits.