978-0134125053 Chapter 9 Part 4

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13) Dante’s Designs has current assets of $57,000 long-term assets of $139,000 current liabilities

of $49,000 long-term liabilities of $93,000. Dante’s debt ratio is: (Round your final answer to

the nearest whole number.)

A) 86%.

B) 67%.

C) 35%.

D) 72%.

Question Type: Application

14) Vintage Boutique reported Interest expense of $5,500, Income tax expense of $24,000 and

Net income of $77,000. Vintage Boutique’s interest coverage ratio is: (Round your final answer

to two decimal places.)

A) 18.36

B) 0.07

C) 0.05

D) 19.36

Question Type: Application

15) TLR Productions reported Interest expense of $9,000, Income tax expense of $27,000 and

Net income of $110,000. TLR’s interest coverage ratio is: (Round your final answer to two

decimal places.)

A) 15.222

B) 16.222

C) 0.062

D) 0.066

Question Type: Application

16) Which of the following statements is TRUE regarding the debt ratio?

A) The debt ratio focuses on the total liabilities of an organization.

B) The debt ratio reveals the percentage of a business’ assets financed with liabilities.

C) The debt ratio is used to analyze a business’s ability to pay its current obligations as they

come due.

D) Both A and B are true statements regarding the debt ratio.

Question Type: Concept

17) A ratio which measures a company’s ability to pay interest on its debt is called the:

A) debt ratio.

B) current ratio.

C) interest coverage ratio.

D) acid-test ratio.

Question Type: Concept

9.8 (Appendix 9A) Account for payroll (Located online only at

www.pearsonhighered.com/kemp)

1) Benefits are extra compensation that is paid directly to the employee.

Question Type: Concept

2) After being withheld, payroll taxes become an asset for the company.

Question Type: Concept

3) A good internal control for payroll is for the Human Resource Department to be in charge of

distributing paychecks to employees.

Question Type: Concept

4) A company may use two payroll accounts as a control for efficiency.

Question Type: Concept

5) Salary is pay stated at an hourly rate.

Question Type: Concept

6) Ronaldo earns $21 per hour and works 40 hours a week. Last week he worked 48 hours; given

that his company pays time and a half for overtime—what is Ronaldo’s gross pay for the week?

(Assume overtime is any time over 40 hours per week. (Assume overtime is any time over 40

hours per week. Round intermediary calculations and your final answer to the nearest cent.)

A) $840.00

B) $1,512.00

C) $1,008.00

D) $1,092.00

Question Type: Application

7) Sydney earns $15 per hour and works 40 hours a week. Last week she worked 50 hours; given

that her company pays time and a half for overtime—what is Sydney’s gross pay for the week?

(Assume overtime is any time over 40 hours per week. Round intermediary calculations and your

final answer to the nearest cent.)

A) $600.00

B) $750.00

C) $825.00

D) $900.00

Question Type: Application

8) Which are generally paid for exceptional performance?

A) Salaries

B) Wages

C) Bonuses

D) Commissions

Question Type: Concept

9) Which are generally paid at an hourly rate?

A) Salaries

B) Wages

C) Bonuses

D) Commissions

Question Type: Concept

10) Pay stated at a monthly or annual rate is considered to be a:

A) salary.

B) wage.

C) bonus.

D) commission.

Question Type: Concept

11) Many salespersons have part of their payroll determined by a percent of sales. These are

called:

A) salaries.

B) wages.

C) bonuses.

D) commissions.

Question Type: Concept

12) Which of the following would NOT be a required payroll deduction for an employee?

A) FICA

B) 401(K) retirement

C) Federal income tax

D) State income tax

Question Type: Concept

13) Which of the following would be a required payroll tax for both the employee and the

employer?

A) Federal income tax

B) FICA

C) FUTA

D) SUTA

Question Type: Concept

14) Which of the following would NOT be part of an employer’s payroll taxes?

A) Federal income tax

B) FICA

C) FUTA

D) SUTA

Question Type: Concept

15) Which of the following does NOT have an effect on the amount of federal income tax to be

withheld from an employee’s pay?

A) Age of employee

B) Marital status of employee

C) Number of withholding allowances claimed

D) Gross pay of employee

Question Type: Concept

16) Most single individuals will claim:

A) 0 allowances.

B) 0 or 1 allowances.

C) 2 allowances.

D) more than 2 allowances.

Question Type: Concept

17) The lower the number of withholdings claimed on a W-4, the:

A) higher the gross pay.

B) higher the net pay.

C) lower the gross pay.

D) lower the net pay.

Question Type: Concept

18) Withheld payroll deductions become:

A) assets of the employer.

B) liabilities of the employer.

C) revenues of the employer.

D) liabilities of the employee.

Question Type: Concept

19) The tax rate on the OASDI portion of FICA is:

A) 7.65%.

B) 1.45%.

C) 6.20%.

D) 0.80%.

Question Type: Concept

20) The tax rate on the HI (Medicare) portion of FICA is:

A) 7.65%.

B) 1.45%.

C) 6.20%.

D) 0.80%.

Question Type: Concept

21) The combined FICA rate for employees is:

A) 7.65%.

B) 1.45%.

C) 6.20%.

D) 0.80%.

Question Type: Concept

22) The maximum tax credit an employer can get for FUTA if they pay unemployment taxes to a

state is:

A) 6.20%.

B) 5.40%.

C) 0.80%.

D) 7.65%.

Question Type: Concept

23) FUTA is paid by the employer on:

A) the first $106,800 of an employee’s earnings.

B) the first $8,000 of an employee’s earnings.

C) the first $7,000 of an employee’s earnings.

D) all of the employee’s earnings.

Question Type: Concept

24) The journal entry to record the employer’s portion of FICA tax includes a:

A) debit to salary expense.

B) debit to payroll tax expense.

C) debit to FICA tax payable.

D) debit to benefits expense.

Question Type: Application

25) Richard is paid a salary of $6,000. At the end of November, his cumulative gross earnings

were $97,000. How much will his employer take out for the OASDI portion of social security for

December? (Round your final answer to the nearest cent.)

A) $372.00

B) $459.00

C) $87.00

D) $324.00

Question Type: Application

26) Richard is paid a salary of $9,000. At the end of November, his cumulative gross earnings

were $95,000. How much will his employer take out for the HI portion of social security for

December? (Round your final answer to the nearest cent.)

A) $558.00

B) $688.50

C) $130.50

D) $486.00

Question Type: Application

27) Marla Smith, an employee of Clown College, earned $113,000 prior to December. Smith’s

salary for December is $11,000. For what amount will Smith’s December salary be subject to

OASDI tax and HI tax, respectively.

A) OASDI $5,500; HI $5,500

B) OASDI $5,500; HI $11,000

C) OASDI $11,000; HI $5,500

D) OASDI $11,000; HI $11,000

Question Type: Application

28) Kat’s wages for December are $8,500. At the end of November, her cumulative gross

earnings were $112,000. How much will her employer take out for the OASDI portion of social

security for December? (Round your final answer to the nearest dollar.)

A) $403

B) $497

C) $527

D) $650

Question Type: Application