Question : 121. All of the following statements regarding FICA taxes True except: A. FICA : 1225198

121. All of the following statements regarding FICA taxes are True except: 

A. FICA taxes are deducted from the employee.

B. Employers must pay withheld FICA taxes to the IRS.

C. The amount of FICA deducted from the employee is credited to a liability account.

D. A self-employed person is exempt from FICA taxes.

E. An employer must pay FICA taxes equal to the amount withheld from the employee.

122. Arena Company provides health insurance to its employees that costs $15,000 per month. In addition, the company contributes 5% of the employees’ $150,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a: 

A. Debit to Medical Insurance Payable $15,000.

B. Debit to Employee Retirement Program Payable $7,500.

C. Debit to Employee Benefits Expense $22,500.

D. Credit to Employee Benefits Expense $15,000.

E. Credit to Employee Benefits Expense $22,500.

123. Arena Company’s salaried employees earn two weeks vacation per year. It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50. Record Arena Company’s weekly journal entry to record the vacation expense: 

A. Debit Vacation Benefits Expense $16,500; credit Vacation Benefits Payable $16,500.

B. Debit Vacation Benefits Expense $17,160; credit Vacation Benefits Payable $17,160.

C. Debit Vacation Benefits Expense $17,875; credit Vacation Benefits Payable $17,875.

D. Debit Vacation Benefits Payable $17,160; credit Vacation Benefits Expense $17,160.

E. Debit Vacation Benefits Payable $16,500; credit Vacation Benefits Expense $16,500.

124. All of the following statements related to current liabilities for U.S. GAAP and IFRS are True except: 

A. The definitions and characteristics of current liabilities are broadly similar for both U.S. GAAP and IFRS.

B. Provision is typically used under IRFS to refer to liability under U.S. GAAP.

C. Because tax regulatory systems of countries are different, the approach to recording taxes is totally different.

D. When there is little uncertainty surrounding current liabilities, both require companies to record them in a similar manner.

E. When there is a known current obligation that involves an uncertain amount, but one that can be reasonable estimated, both require similar treatment.

125. All of the following statements related to recording warranty expense are True except: 

A. Recording estimated warranty expense complies with the full disclosure principle.

B. Warranty expense should be recorded in the period when the warranty service is performed.

C. Recording estimated warranty expense complies with the matching principle.

D. The seller reports a warranty obligation as a liability.

E. Warranty costs are probable and the amount can be estimated.

126. During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the estimated warranty expense for the month is: 

A. Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.

B. Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000.

C. Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.

D. Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400.

E. Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800.

127. During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the customer warranty repairs is: 

A. Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.

B. Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.

C. Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.

D. Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.

E. Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.