Match Each Definition with the Correct Term Below

question 114

Multiple Choice

Match each definition with the correct term below.
-Allowance method

• A)One way to control a cash fund and cash advances.
• B)A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement.
• C)The method of estimating uncollectible accounts that calculates the Uncollectible Accounts Expense.
• D)The process of accounting for the difference between the balance on a company's bank statement and the balance in its Cash account.
• E)The total proceeds of a promissory note.
• F)An unconditional promise to pay a definite sum of money on demand or at a future date.
• G)The method of accounting for uncollectible accounts that matches bad debts against the sales they help produce.
• H)Short-term financial assets that arise from credit sales made in the ordinary course of doing business.
• I)A method of conducting business transactions that does not involve the actual transfer of cash.
• J)The cost of borrowing money or the return on lending money.
• K)A potential liability that can develop into a real liability if a particular event occurs.
• L)The method of estimating uncollectible accounts that calculates the targeted balance of Allowance for Uncollectible Accounts.

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Definitions:

Payroll Tax Expense

Tax that a business must pay based on the wages and salaries of its employees, including social security, Medicare, and unemployment taxes.

FICA

The Federal Insurance Contributions Act, which funds Social Security and Medicare, requiring employers and employees to pay a percentage of earnings.

Look-Back Period

A period of time used to determine whether a business should make its Form 941 tax deposits on a monthly or semiweekly basis. The IRS defines this period as July 1 through June 30 of the year prior to the year in which Form 941 tax deposits will be made.

Form 941

A tax form used by employers to report federal withholdings from employee wages, including Social Security and Medicare taxes.