Classify Each of the Following Items as Either

question 49

Essay

Classify each of the following items as either:
a.Current liability
b.Long-term liability
c.Not a liability
1.30-day promissory note
2.Payment of a 4-year term loan due this year
3.Salaries payable
4.Debt guarantees
5.FICA taxes payable
6.Income taxes payable
7.Payment of a 30-year term loan due this year
8.Payment of a 30-year term loan due next year.(The company's operating cycle is 2
months.)
9.Warranty work completed this year
10.Accounts payable

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Definitions:

Short-term Capital Loss

A loss realized from the sale or exchange of a capital asset held for one year or less.

Long-term Capital Gain

Profit from the sale of an asset held for more than one year, typically taxed at a lower rate than regular income.

Section 1245

A section of the tax code that involves recapturing depreciation on certain types of property as ordinary income upon sale.

Section 1231 Gain

A gain from the sale or exchange of property used in a business, subject to favorable tax treatment under Section 1231 of the U.S. tax code.