Which of the Following Statements Is False

question 20

Multiple Choice

Which of the following statements is false?

• A)A company may exclude a short-term obligation from current liabilities if it intends to refinance the obligation on a long-term basis and have an unconditional right to defer settlement of the liability for at least 12 months.
• B)Cash dividends should be recorded as a liability when they are declared by the board of directors.
• C)Under the cash basis method, warranty costs are charged to expense as they are paid.
• D)Social security taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.

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Definitions:

Variable Cost Concept

A cost that varies directly with the level of production or sales, such as materials and labor.

Unit Selling Price

The amount of money charged for selling one unit of a product or service.

Markup Percentage

Markup percentage is a measure of how much the selling price of an item or service exceeds its cost, expressed as a percentage of the cost.

Variable Cost Concept

The principle that costs vary in proportion to the level of production or business activity, meaning they increase with more output and decrease with less output.