Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following is NOT a true statement regarding municipal bonds?

Municipal bonds are typically issued by state and local governments.

Interest income from municipal bonds is usually exempt from federal income tax.

Municipal bonds can be used to finance public projects such as schools and highways.

Municipal bonds are considered a type of current liability on the issuer's balance sheet.

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Verified step by step guidance

Step 1: Understand the nature of municipal bonds. Municipal bonds are debt securities issued by state and local governments to finance public projects such as schools, highways, and other infrastructure. They are typically long-term liabilities, not current liabilities.

Step 2: Review the tax treatment of municipal bonds. Interest income earned from municipal bonds is usually exempt from federal income tax, making them attractive to investors seeking tax-advantaged investments.

Step 3: Examine the classification of municipal bonds on the issuer's balance sheet. Municipal bonds are recorded as long-term liabilities because they represent obligations that are due over a period longer than one year.

Step 4: Compare the statements provided in the question. Identify which statement contradicts the fundamental characteristics of municipal bonds. The statement claiming that municipal bonds are considered a type of current liability on the issuer's balance sheet is incorrect.

Step 5: Conclude that the correct answer is the statement regarding municipal bonds being classified as current liabilities, as this does not align with their typical treatment as long-term liabilities.