Question

1. The modified accelerated cost recovery system (MACRS):

A)     Is included in the U.S. federal income tax rules for depreciating assets.

B)     Is required for tax reporting.

C)     Is required for financial reporting.

D)     Is identical to units of production depreciation.

E)     All of the above.

2. Times interest earned is calculated by:

A)     Multiplying interest expense times income.

B)     Dividing interest expense by income before interest expense.

C)     Dividing income before interest expense and any income tax by interest expense.

D)     Dividing interest and income tax expense by income before interest and income tax expense.

E)     Dividing income before interest expense by interest expense and income taxes.

3. Employers:

A)     Pay FICA taxes in equal amount to the FICA taxes withheld from the employees.

B)     Withhold employees' FICA taxes.

C)     Pay unemployment taxes to the federal government.

D)     Pay unemployment taxes to both the state and federal governments.

E)     All of the above.

4. FUTA taxes are:

A)     Social Security taxes.

B)     Medicare taxes.

C)     Employee income taxes.

D)     Unemployment taxes.

E)     Employee deductions.

5. Employers' responsibilities for payroll include:

A)     Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld.

B)     Filing Form 941, the Employer's Quarterly Federal Tax Return.

C)     Filing Form 940, the Annual Federal Unemployment Tax Return.

D)     Individual earnings records for each employee.

E)     All of the above.

6. A bond sells at a discount when the:

A)     Contract rate is above the market rate.

B)     Contract rate is equal to the market rate.

C)     Contract rate is below the market rate.

D)     Bond has a short-term life.

E)     Bond pays interest only once a year.

7. A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A)     A debit to Organization Expenses for $3,000.

B)     A debit to Organization Expenses for $5,000.

C)     A credit to Common Stock for $5,000.

D)     A credit to Contributed Capital in Excess of Par Value, Common Stock for $5,000.

E)     A debit to Contributed Capital in Excess of Par Value, Common Stock for $2,000.

8. A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

A)     A debit to Common Stock for $60,000.

B)     A debit to Land for $60,000.

C)     A credit to Land for $60,000.

D)     A credit to Contributed Capital in Excess of Par Value, Common Stock for $24,000.

E)     A credit to Common Stock for $84,000.

Answer 1

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1. The modified accelerated cost recovery system (MACRS):

A) Is included in the U.S. federal income tax rules for depreciating assets.

2. Times interest earned is calculated by:

C) Dividing income before interest expense and any income tax by interest expense.

3. Employers:

E) All of the above.

4. FUTA taxes are:

D) Unemployment taxes.

5. Employers' responsibilities for payroll include:

E) All of the above.

6. A bond sells at a discount when the:

C) Contract rate is below the market rate.

Answer 7

B) A debit to Organization Expenses for $5,000.

Answer 8

D) A credit to Contributed Capital in Excess of Par Value, Common Stock for $24,000.