TRUE-FALSE STATEMENTS 1) A current liability must be paid out of current earnings

TRUE-FALSE STATEMENTS

1) A current liability must be paid out of current earnings.

2. Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

3. The relationship between current liabilities and current assets is important in evaluating a company's ability to pay off its long-term debt.

4. A company whose current liabilities exceed its current assets may have a liquidity problem.

5. A debt due within 6 months of the statement of financial position date which is expected to be paid out of cash will be classified as a current liability.

6. A £2,000,000, 7%, 6-month note payable requires an interest payment of £140,000 at maturity.

7. Notes payable usually require the borrower to pay interest.

8. A note payable must always be paid before an account payable.

9. A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity.

10. With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

11. Interest expense on a note payable is only recorded at maturity.

12. Interest expense is reported under Other income and expense in the income statement.

13. Unearned revenues should be classified as Other income and expense on the Income Statement.

14. The higher the sales tax rate, the more profit a retailer can earn.

15. Metropolitan Symphony sells 200 season tickets for $60,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $24,000.