True / False Questions
 

1.A liability that is known to exist but the precise dollar amount is not known is called a possible liability. 
 
 

2.Working capital is equal to current assets less current liabilities. 
 
 

3.Current liabilities are obligations that must be repaid within the shorter of one year or the operating cycle. 
 
 

4.Accounts payable are often subdivided into the categories of trade accounts payable and notes payable. 
 
 

5.When money is borrowed by issuing a note payable, the borrower records a liability equal to the maturity value of the note. 
 
 

6.Since payment is due within one year, the current portion of long-term debt should be reported separately in the long-term liabilities section of the balance sheet. 
 
 

7.Gross pay less withholding tax and less worker's compensation is considered net pay. 
 
 

8.The amount of FICA tax and Medicare tax withheld from an employee is used to pay the employer's percentage of the tax and is mailed to the government quarterly. 
 
 

9.The most common types of payroll deductions are taxes, insurance premiums, employee savings, and union dues. 
 
 

10.Worker's compensation premiums are deducted from each employee's gross pay.