21.A contingent liability is a liability that may occur if some future event takes place.
22.In concept, the estimating of Warranty Expense when products are sold under warranty is similar to the estimating of Bad Debt Expense based on credit sales.
23.FICA taxes and federal income taxes are levied on employees' earnings without limit.
24.FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.
25.The employer incurs a payroll tax expense equal to the amount withheld from the employees' wages for federal income taxes.
26.Internal control over payroll is not necessary because employees will complain if they do not receive the correct amount on their payroll checks.
27.The timekeeping function includes supervisors monitoring hours worked through time cards and time reports.
28.The human resources department documents and authorizes employment of new employees.
29.Payroll activities involve three functions: hiring employees, preparing the payroll, and paying the payroll.
a30.Post-retirement benefits consist of payments by employers to retired employees for health care, life insurance, and pensions.
31.A debt that is expected to be paid within one year through the creation of long-term debt is a current liability.
32.Notes payable usually are issued to meet long-term financing needs.
33.Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet.
34.In a given year, total warranty expense is the sum of actual warranty costs incurred on units sold plus the estimated cost of servicing those units in the future.
35.FICA taxes are a voluntary deduction from employee earnings.
36.FICA taxes are a deduction from employee earnings and are also imposed upon employers as an expense.
37.The objectives of internal accounting control for payrolls are (a) to safeguard company assets from unauthorized payments of payrolls and (b) to assure accuracy and reliability of the accounting records pertaining to payroll.
a38.When a company gives employees rights to receive compensation for absences and the payment for such absences is probable and the amount can be reasonably estimated, the company should accrue a liability.