Author: Anonymous

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

A note payable can be used to extend the payment due on an account payable.

Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $62,000; the land at $35,000, and the parking lot at $18,000. Land should be recorded in the accounting records with an allocated cost of:

Revenue expenditures are also called balance sheet expenditures.

Payroll is an example of a contingent liability for the employer.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the straight-line method. The machine’s useful life is estimated to be 5 years with a $4,000 salvage value. The book value of the machine at the end of year 2 is:

A basic present value concept is that cash paid or received in the future has more value now than the same amount of cash received today.

An employee earned $4,600 in February working for an employer. Cumulative earnings of the previous pay periods are $4,800. The FICA tax rate for Social Security is 6.2% of the first $118,500 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the amount the employer should record as payroll taxes expense for the month of February?

All expected future payments are liabilities.