CFA Practice Question

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CFA Practice Question

Which of the following statements about liability is false?
A. Cash dividends should be recorded as a liability when they are declared by the board of directors.
B. Payroll taxes withheld from employees' payroll cheques should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.
C. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis and demonstrates an ability to complete the refinancing.
Explanation: The definition of a liability includes payroll taxes since the company is obligated to make the payments to the government at some point in the future, after the expenses are incurred.

User Contributed Comments 2

User Comment
Lamkerst such strong words as ALWAYS, NEVER, NO, etc are suspisious
meeravenk Answered this by process of elimination
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