Question

Which of the following statements is false?

1) Vested rights exist when an employer has an obligation to make payment to an employee
2) Unemployment taxes are paid by the employer
3) Profit-Sharing Bonus Payable is usually recognized as a long-term liability
4) The liability for compensated absences should be recognized in the year

Answer 1

The false statement among the provided options is that 'Profit-Sharing Bonus Payable is usually recognized as a long-term liability,' because such bonuses are typically considered a current liability as they are payable within a short timeframe. The false statement is 3.

Step-by-step explanation:

The student has posed a question which involves identifying the false statement from the given options:

1. Vested rights exist when an employer has an obligation to make payment to an employee.
2. Unemployment taxes are paid by the employer.
3. Profit-Sharing Bonus Payable is usually recognized as a long-term liability.
4. The liability for compensated absences should be recognized in the year.

The false statement among these options is statement 3: 'Profit-Sharing Bonus Payable is usually recognized as a long-term liability.' Profit-sharing bonuses are typically recognized as a current liability, not a long-term liability, because they are payable in the short term, usually within a year of being earned.

Unemployment taxes are indeed paid by the employer into a fund to pay benefits to workers who lose their jobs, as stipulated by unemployment insurance. Additionally, the liability for compensated absences, like vacation time, should indeed be recognized in the year they are earned by the employee.