Types of Liabilities

Concept: Types of Liabilities

9m

Types of Liabilities Additional Practice Problems

Liabilities are listed on the balance sheet in

a. order of their relative dollar size

b. order of their maturity or due date

c. no particular order

d. alphabetical order

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A current liability is a short-term obligation that

a. will be paid within the current operating cycle.

b. will be paid within one year of the balance sheet date.

c. will be paid in the longer of periods (A) and (B).

d. does not affect liquidity.

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The following selected account balances were taken from Buckeye Company's general ledger at January 1, 2005 and December 31, 2005:

Calculate the amount of  cost of goods sold reported in Buckeye Company's 2005 income statement.

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All but which of the following accounts are liabilities on the balance sheet?

a. Notes payable

b. Unearned Revenues

c. Accrued liabilities

d. Dividends

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Which of the following statements about liabilities is correct?

a. When a liability is first recorded, it is measured as the value of what is received when it is incurred (e.g., cash borrowed) or the fair value (present value) of what is promised to be paid—whichever is more evident.

b. A decrease in a long term liability will increase a firm’s Current Ratio.

c. Accrued liabilities are expenses that have been incurred before the end of an accounting period but have not been paid.

d. All of the above are correct.

e. Only A & C are correct.

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Which of the following is true about current liabilities?

a. They are also called short-term liabilities

b. They are obligations due within a year or the company’s operating cycle, whichever is longer.

c. They are expected to be paid with current assets or by creating other liabilities.

d. All of the above.

e. None of the above

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Listed below are the account balances of the Frank Corporation on December 31, 2014.

What are Frank’s total assets and total liabilities on December 31, 2014:

a. $ 420,000; $180,000.

b. $ 420,000; $160,000.

c. $ 440,000; $160,000.

d. $ 460,000; $130,000.

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Remington provided the following information about its balance sheet. Based on the information provided, how much are Remington's liabilities?

a. $200.

b. $900.

c. $1,200.

d. $1,700.

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Which of the following are not classified as long-term liabilities?

a. Mortgage payable

b. Current portion of long-term note payable

c. Note payable

d. Bonds payable

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Which of the following accounts could not be classified as a current liability?

a. Unearned revenues

b. Accounts payable

c. Notes payable (due in 11 months).

d. Notes payable (due in 5 years).

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