21.A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is 2.5.
Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest Expense
Times Interest Earned Ratio = $250,000/$100,000 = 2.5
22.A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.
23.Promissory notes cannot be transferred from party to party because they are nonnegotiable.
24.A note payable can be used to extend the payment due on an account payable.
25.Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.
26.Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.
27.The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.
28.Employers must pay FICA taxes twice the amount of the FICA taxes withheld from their employees.
29.The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.
30.A high merit rating for state unemployment taxes means that an employer has high employee turnover or seasonal hiring.