Which of the Following Statements Is Not True About Liabilities

question 6

Multiple Choice

Which of the following statements is not true about liabilities?

• A) Liabilities are debts owed to outsiders.
• B) Account titles of liabilities often include the term "payable".
• C) Cash received before services are performed are considered to be liabilities.
• D) Liabilities do not include wages owed to employees of the company.

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Definitions:

Unit Variable Cost

The cost associated with producing one unit of output, including labor, materials, and overhead, that varies directly with the level of production.

Fixed Manufacturing Costs

Costs that do not vary with the level of production output, such as rent, salaries, and insurance.

Net Income

The amount by which revenues exceed expenses.

Incremental Analysis

The process of identifying the financial data that change under alternative courses of action, often used in decision-making situations where costs and benefits need to be evaluated.