When Payrolls and Other Liabilities Are Incurred and Must Be

question 3

Multiple Choice

When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected, what type of short-term note is desirable and secured by a government's power to tax?

• A) Tax Relief Note Payable.
• B) Tax Budget Note Payable.
• C) Tax Anticipation Note Payable.
• D) Tax Encumbrances Note Payable.

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Definitions:

Accrued Expenses

Expenses that have been incurred but not yet paid, typically recorded through adjusting journal entries in the accounting process.

Prepaid Expenses

Costs incurred beforehand for products or services that will be obtained at a later date.

Property Taxes

Taxes assessed on real estate and sometimes personal property, based on the assessed value of the property.

Balance Sheet

A financial report detailing a company's assets, liabilities, and equity of shareholders at a given moment.