Answer the following statements true (T) or false (F)
1. Because amounts owed for products or services on account are typically due in 60 days, they are
current liabilities.
2. Sales Tax Payable is usually calculated as a percentage of the amount of the sale.
3. Sales tax is an expense of the business.
4. Unearned revenues are current liabilities until they are earned.
5. Unearned revenue arises because the business receives goods or services before payment has been
made.
1. False - Because amounts owed for products or services on account are typically due in 30 days, they are current liabilities.
2. True
3. False -Sales tax is a current liability.
4. True
5. False - Unearned revenue arises when a business has received cash in advance of providing
goods or performing work and, therefore, has an obligation to provide goods or services to the customer in the future.
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