Indicate Whether Each of the Following Statements Is True or False

question 74

Short Answer

Indicate whether each of the following statements is true or false.
1. The portion of a long-term liability due within one year or the operating cycle must always be classified as a current liability
2. Current liabilities are those liabilities that are usually repaid using current assets
3. The liquidity of an asset refers to how recently the asset was received
4. A current liability is due within one year or the operating cycle, whichever is longer
5. The balance sheets for most companies show current assets and current liabilities

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Definitions:

Prior Period Adjustment

Adjustments made to the financial statements of a prior period to correct errors or implement changes in accounting policy.

Retained Earnings Account

An equity account on the balance sheet that represents the accumulated net earnings not distributed to shareholders in the form of dividends.

Net Income

The final income of a company, achieved by subtracting expenses and taxes from the total revenues.

Income Tax Expense

The expense incurred by individuals or corporations due to taxable income, recognized in financial statements.