MGMT 200 - Final Exam
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1. Which of the following is not a characteristic of a liability?
A) It represents a probable, future sacrifice of economic benefits.
B) It must be payable in cash.
C) It arises from present obligations to other entities.
D) It results from past transactions or events.: B) It must be payable in cash.
2. On November 1, 2024, a company signed a $100,000, 6%, six-month note
payable with the amount borrowed plus accrued interest due six months later
on May 1, 2025. The company recorded accrued interest on December 31, 2024.
What effect does accrued interest have on the financial statements in 2024?
A) Assets increase and stockholders' equity decreases.
B) Assets increase and liabilities increase.
C) Liabilities increase and expenses increase.
D) Assets increase and expenses increase.: C) Liabilities increase and expenses
increase.
3. Which of the following are employer payroll costs?
I. FICA taxes
II. Federal and state unemployment taxes
III. Federal and state income taxes
IV. Employer contributions to a retirement plan
A) I and IV
B) II and III
C) I, III, and IV
D) I, II, and IV: D) I, II, and IV
4. Rock Adventures has 15 employees each working 40 hours per week and
earning $30 an hour. Federal income taxes are withheld at 15% and state
income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8%
of the first $7,000 earned per employee. What is the actual payroll payment
(salaries payable) for the first week of January?
A) $13,923
B) $12,843
C) $5,157
D) $18,000: B) $12,843
5. Rock Adventures has 15 employees each working 40 hours per week and
earning $30 an hour. Federal income taxes are withheld at 15% and state
income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8%
of the first $7,000 earned per employee. What is the employer's total payroll
tax expense for the first week of January?
A) $1,377
, MGMT 200 - Final Exam
Study online at https://quizlet.com/_eao05l
B) $3,141
C) $2,061
D) $684: C) $2,061
6. In January 2024, Summit Department Store sells a gift card for $65 and
receives cash. In February 2024, the customer comes back and spends $35 of
the gift card to purchase a water bottle. What is the financial statement effect
of the sale of the gift card in January?
A) Increase assets by $65 and increase stockholders' equity by $65
B) Increase assets by $35, decrease liabilities by $30, and increase stockhold-
ers' equity by $65
C) Increase assets by $65 and increase liabilities by $65
D) Increase assets by $35, increase liabilities by $65, and decrease stockhold-
ers' equity by $30: C) Increase assets by $65 and increase liabilities by $65
7. The current portion of long-term debt should be:
A) Reported as a current liability in the balance sheet.
B) Reported as a long-term liability in the balance sheet.
C) Combined with the rest of the long-term debt in the balance sheet.
D) Paid immediately.: A) Reported as a current liability in the balance sheet.
8. Reeves Company filed suit against Higgins, Incorporated, seeking damages
for copyright violations. Higgins' legal counsel believes it is probable that
Higgins will settle the lawsuit for an estimated amount in the range of $180,000
to $280,000, with all amounts in the range considered equally likely. How
should Higgins report this litigation?
A) As a liability for $180,000 with disclosure of the range
B) As a liability for $280,000 with disclosure of the range
C) As a liability for $230,000 with disclosure of the range
D) In a disclosure only; no liability is reported: A) As a liability for $180,000 with
disclosure of the range
9. While providing services to Palmer Company, Raider Group caused dam-
ages of $125,000. As of the end of the year, both parties agree that it is probable
that Raider will pay Palmer the full amount of the damages within the next two
months. How would Raider and Palmer report the lawsuit at the end of the
year?
A) Raider reports a loss; Palmer reports nothing.
B) Raider reports nothing; Palmer reports nothing.
C) Raider reports nothing; Palmer reports a gain.
D) Raider reports a loss; Palmer reports a gain.: A) Raider reports a loss; Palmer
reports nothing.
Study online at https://quizlet.com/_eao05l
1. Which of the following is not a characteristic of a liability?
A) It represents a probable, future sacrifice of economic benefits.
B) It must be payable in cash.
C) It arises from present obligations to other entities.
D) It results from past transactions or events.: B) It must be payable in cash.
2. On November 1, 2024, a company signed a $100,000, 6%, six-month note
payable with the amount borrowed plus accrued interest due six months later
on May 1, 2025. The company recorded accrued interest on December 31, 2024.
What effect does accrued interest have on the financial statements in 2024?
A) Assets increase and stockholders' equity decreases.
B) Assets increase and liabilities increase.
C) Liabilities increase and expenses increase.
D) Assets increase and expenses increase.: C) Liabilities increase and expenses
increase.
3. Which of the following are employer payroll costs?
I. FICA taxes
II. Federal and state unemployment taxes
III. Federal and state income taxes
IV. Employer contributions to a retirement plan
A) I and IV
B) II and III
C) I, III, and IV
D) I, II, and IV: D) I, II, and IV
4. Rock Adventures has 15 employees each working 40 hours per week and
earning $30 an hour. Federal income taxes are withheld at 15% and state
income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8%
of the first $7,000 earned per employee. What is the actual payroll payment
(salaries payable) for the first week of January?
A) $13,923
B) $12,843
C) $5,157
D) $18,000: B) $12,843
5. Rock Adventures has 15 employees each working 40 hours per week and
earning $30 an hour. Federal income taxes are withheld at 15% and state
income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8%
of the first $7,000 earned per employee. What is the employer's total payroll
tax expense for the first week of January?
A) $1,377
, MGMT 200 - Final Exam
Study online at https://quizlet.com/_eao05l
B) $3,141
C) $2,061
D) $684: C) $2,061
6. In January 2024, Summit Department Store sells a gift card for $65 and
receives cash. In February 2024, the customer comes back and spends $35 of
the gift card to purchase a water bottle. What is the financial statement effect
of the sale of the gift card in January?
A) Increase assets by $65 and increase stockholders' equity by $65
B) Increase assets by $35, decrease liabilities by $30, and increase stockhold-
ers' equity by $65
C) Increase assets by $65 and increase liabilities by $65
D) Increase assets by $35, increase liabilities by $65, and decrease stockhold-
ers' equity by $30: C) Increase assets by $65 and increase liabilities by $65
7. The current portion of long-term debt should be:
A) Reported as a current liability in the balance sheet.
B) Reported as a long-term liability in the balance sheet.
C) Combined with the rest of the long-term debt in the balance sheet.
D) Paid immediately.: A) Reported as a current liability in the balance sheet.
8. Reeves Company filed suit against Higgins, Incorporated, seeking damages
for copyright violations. Higgins' legal counsel believes it is probable that
Higgins will settle the lawsuit for an estimated amount in the range of $180,000
to $280,000, with all amounts in the range considered equally likely. How
should Higgins report this litigation?
A) As a liability for $180,000 with disclosure of the range
B) As a liability for $280,000 with disclosure of the range
C) As a liability for $230,000 with disclosure of the range
D) In a disclosure only; no liability is reported: A) As a liability for $180,000 with
disclosure of the range
9. While providing services to Palmer Company, Raider Group caused dam-
ages of $125,000. As of the end of the year, both parties agree that it is probable
that Raider will pay Palmer the full amount of the damages within the next two
months. How would Raider and Palmer report the lawsuit at the end of the
year?
A) Raider reports a loss; Palmer reports nothing.
B) Raider reports nothing; Palmer reports nothing.
C) Raider reports nothing; Palmer reports a gain.
D) Raider reports a loss; Palmer reports a gain.: A) Raider reports a loss; Palmer
reports nothing.
