Question

Which of the following statements regarding liabilities is false?

		Payroll taxes are withheld from employee paychecks and create liabilities since they are payable to other entities.
		A warranty is an example of a contingent liability since the future obligation depends on a future event.
		Liabilities require a transfer of assets in the future.
		A note payable must always be characterized as long-term on the balance sheet.

Answer 1

• Correct Answer = Option #4: The false statement is--

A note payable must always be characterized as long-term on the balance sheet.

• This is because if a notes payable is issued for a short period (usually for a period LESS than a year) like 3 months or 6 months, that Notes Payable would be classified as SHORT TERM Liability OR Current Liabilities.
  Notes Payable will be characterised as Long term on Balance Sheet if these are payable after 1 year, in the long period.