Current Liabilities Quiz

Choose the best answer for each of the following questions and click on the Answer arrow to check yourself.  Answers are provided.

  1. Which of the following would not be considered a current liability?
    a.  Warranty liability
    b.  Sales tax payable
    c.  FUTA payable
    d.  a note payable due in 18 months
  2. John borrows $12,000 on a 6% 3 month note payable. The money is borrowed on January 1. What is the interest expense for January?
    a.  $720
    b.  No interest expense because the note is due in 3 months
    c.  $60
    d.  None of these
  3. An example of a contingent liability is:
    a.  warranty liability
    b.  FUTA Payable
    c.  Interest Payable
    d.  FICA Payable
  4. Who pays unemployment taxes (FUTA and SUTA)?
    a.  Employer
    b.  Employee
    c.  Both employer and employee
    d.  Neither employer nor employee
  5. Who pays social security taxes (FICA and Medicare)?
    a.  Employer
    b.  Employee
    c.  Both Employer and Employee
    d.  Neither Employer nor Employee
  6. Johnson purchases an office building and finances it with a 30-year mortgage. The payments Johnson will make in the next 12 months areconsidered:
    a.  a long term liability
    b.  a current liability
    c. interest expense only
    d.  payments to principal only
  7. Contingent liabilities should be journalized as liabilities if they are:
    a.  reasonable
    b.  logical
    c.  probable and can be estimated
    d. none of these
  8. Working Capital is defined as:
    a.  cash on hand
    b. cash in a savings account
    c. current assets - current liabilities
    d. current assets/current liabilities
  9. On which financial statement would Unearned Revenues appear?
    a.  on the income statement
    b.  on the balance sheet as an asset
    c.  on the balance sheet as a liability
    d.  on the income statement as revenue
  10. There are two payroll journal entries described in your text...one to record the payroll for employees, and:
    a.  the other entry is for employee vacations and sick leave
    b.  the other entry is for employee income tax liabilities
    c.  the other entry is for employee withholding
    d.  the other entry is for the employer's payroll taxes