Question

1. A possible liability is a liability that is known to exist but the exact amount is unknown.

Select one:

True

False

2. Obligations that must be repaid within one year or the operating cycle, whichever is shorter, are called current liabilities.

Select one:

True

False

Points out of 5.00

3. Net pay equals gross pay less applicable payroll taxes and worker's compensation insurance.

Select one:

True

False

4. The withholding of taxes from an employee's pay is recorded as an expense to the company.

Select one:

True

False

5. When bonds are sold by one investor to another, they sell at market price plus accrued interest since the last payment date.

Select one:

True

False

Answer 1

1. A possible liability is a liability that is known to exist but the exact amount is unknown. This is FALSE. A possible or contingent liability is the liability that may or may not occur at a future that. I mean occurance of that liability is not certain. A liability that is known to exist but the exact amount is unknown is called provision.

2. Obligations that must be repaid within one year or the operating cycle, whichever is shorter, are called current liabilities.This is TRUE. Current Liabilities are the liabilities which is to be repaid within one year or the operating cycle in which it is incurred, whichever is shorter.

3.  Net pay equals gross pay less applicable payroll taxes and worker's compensation insurance. This is TRUE. Net pay means Gross pay less all deductions or say take home salary.

4. The withholding of taxes from an employee's pay is recorded as an expense to the company. This is FALSE. This is a liability for the company which is to be deposited to the government on behalf of Employees.

5. When bonds are sold by one investor to another, they sell at market price plus accrued interest since the last payment date. This is TRUE. This is done generally. But in case of manual registeration of transfer or transfer certificate or Bonds Certificate, A cut off date is annouced by company. If Bonds are sold after that date by one investor to another investor then the one investor is entitled to receive the interest and in that case he will not charge interest from another investor whereas he will also pay interest for that period for which another investor is holding bonds.