Typically, current liabilities are payable within one year, and long-term liabilities are payable more than one year from the balance sheet date. True False Given a choice, most companies would prefer to report a liability as current father than long-term, because doing so may cause the firm to appear less risky. True False When a company borrows cash from a bank promising to repay the amount borrowed plus interest, the borrower reports its liability as notes payable. True False Interest is stated in terms of an annual percentage rate to be applied to the face value of the loan. True False Accounts payable are amounts the company owes to suppliers of merchandise or services that it has bought on credit. True False Deductions from employee salaries in determining the amount of payroll checks include withholdings for federal and state income taxes, FICA taxes, and the employee portion of insurance and retirement contributions. True False Companies are required by law to withhold federal and state income taxes from employees' paychecks and remit these taxes to the government. True False The employer records amounts deducted from employee payroll as liabilities until it pays them to the appropriate organizations. True False FICA taxes are paid only by the employee. True False The employer is required to match the amount of FICA taxes withheld for each employee, effectively doubling the amount paid into Social Security. True False Additional employee benefits paid for by the employer are often referred to as fringe benefits which are paid by employees. True False When a company receives cash in advance, it debits Cash and credits a revenue account: called Deferred Revenue. True False Airlines do not record revenue when a ticket is sold but wait to record revenue until the actual flight occurs. True False Companies selling products subject to sales taxes are responsible for collecting the sales tax directly from customers and periodically if they want, remitting the sales taxes collected to the state and local governments some of it. True False Long-term obligations such as notes, mortgages, and bonds are reported as long-term liabilities when they become payable within one year of the balance sheet date. True False A contingent liability is an existing, uncertain situation that might result in a loss. True False The journal entry to record a contingent liability requires a debit to a loss (or expense) account and a credit to a liability. True False Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current? B) It may increase interest rates on borrowing. D) It may reduce interest rates on borrowing. A) It may cause the firm to appear less risky to investors and creditors. C) It may cause the company to appear more stable commanding a higher stock price for nowy stock listings. Which of the following is not a current liability? C) Current portion of long-term debt. B) A note payable due in 2 years. A) Accounts payable. D) Sales tax payable. Which of the following is not a characteristic of a liability? D) It results from past transactions or events. C) It arises from present obligations to other entities. B) It must be payable in cash. A) It represents a probable, future sacrifice of economic benefits
