Indicate whether each of the following statements is true or false:

1. When a companys cash account balance is less than its accounts payable account balance, bankruptcy is likely to follow.

2. When a company receives a down payment from a customer for merchandise to be delivered during a subsequent accounting period, the company incurs a liability.

3. All companies are required to calculate their income tax liability as of December 31 each year.

4. Payment to a vendor of an outstanding account payable had no effect on the operating profit of either the payer or the recipient of the payment.

5. If company X guarantees each of its salespersons a minimum year end bonus of $3,000, recognition of this expense should occur only at year-end when the bonuses are actually paid.

6. Accrued Interest Expense Payable is a liability account, not an expense account.

7. It is possible, but undesirable, to operate an accounting system solely with a balance sheet (in other words, without an income statement).

8. When Leland Corporation determines that one of its customers is unlikely to pay its outstanding receivables (because of its financial difficulties), Leland should make no accounting entry until it has exhausted all avenues for securing payment.

9. The repayment of a loan reduces the borrowing companys retained earnings.

10. In cash (as contrasted with accrual) accounting, a company does not record the amount due from customers in its accounting records.