Chapter 13

Question 1

Liabilities Definition:

Answer 1

Probable future sacrifices of economic benefits arising from present obligations of a particular entity

Question 2

FICA Tax Percentages

Answer 2

6.2% paid by both employer and employee for 12.4% total

Question 3

Medicare Tax Percentages

Answer 3

1.45% paid by both employer and employee for 2.9% total

Question 4

FUTA Tax Percentages and Rules

Answer 4

6% taken on first $7000 paid to each employee
Employer receives credit of up to 5.4% of unemployment taxes paid

Question 5

What do we do with a Gain Contingency?

Answer 5

Only disclose. Not required to do anything however

Question 6

3 types of Loss Contingencies

Answer 6

1. Probable
2. Reasonable
3. Remote

Question 7

What to do for each type of Loss Contingency

Answer 7

Probable: Disclose and only Accrue if estimable
Reasonable: Disclose
Remote: Nothing

Question 8

2 types of Warranties

Answer 8

Assurance
Service

Question 9

Assurance Warranty

Answer 9

Guarantee of quality to customer

Question 10

Service Warranty

Answer 10

Anything beyond assurance warranty

Question 11

Assurance Warranty Cash vs Accrual

Answer 11

Accrual only happens when it is estimable, if not then cash. In accrual you do everything up front, not as it happens