Question

Interest payment is the main difference between accounts payable and notes payable. *

True

False

Dividends in arrears on non-cumulative preferred stock are considered a liability *

True

False

Cash is one of the main tools of paying dividends. *

True

False

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

True

False

Answer 1

Part 1) FALSE

Main difference between accounts payable and notes payable is --- Accounts payable is regarded as money owed to supplied or vendor against any purchase of goods made by company. Whereas Notes Payable is the written promissory note for paying certain sum of money at future specified date.

Part 2) FALSE

Dividend in arrears on non cumulative preferred stock are not considered as liability if they are not declared. Since company does not have obligation to pay dividends of previous years on non cumulative preferred stock if sufficient income was not generated.

Part 3) TRUE

Dividends can be paid in cash, stock etc.Cash is one of the main tools of paying dividend.

Part 4) TRUE

Current liabilities are expected to be paid within one year or normal operating cycle. Even if normal operating cycle is longer than 12 months, then also it is classified as current liability.