Question

Which of the following statements is false? A. Cash dividends should be recorded as a liability when they are declared by the board of directors. B. FICA taxes withheld from employees' payroll checks 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. D. Under the cash basis method, warranty costs are charged to expense as they are paid.

Answer 1

Answer:

The answer is: B) FICA taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.

Explanation:

FICA taxes (or payroll taxes) are based on an employee's salary. Both employees and employer pay FICA taxes for Social Security and Medicare. Employers withhold these taxes from their employees' paychecks, and then pays them to the Internal Revenue Service (IRS).