Presented below is the current liabilities section of Micro Corporation

(amounts in thousands).

Instructions Answer the following questions.

(a) What are the essential characteristics that make an item a liability?

(b) What distinguishes a current liability from a non-current liability?

(c) What are accrued liabilities? Give three examples of accrued liabilities that Micro might have.

(d) What is the theoretically correct way to value liabilities? How are current liabilities usually valued?

(e) Why are notes payable reported first in the current liabilities section?

(f) What might be the items that comprise Micro’s liability for “Compensation to employees”?

Transcribed Image Text:

2015 Current liabilities Notes payable 68,713 2014 7,700 Accounts payable 179,496 101,379 Compensation to employees 60,312 31,649 Accrued liabilities 158,198 77,621 Income taxes payable 10,486 26,491 Current maturities of long-term debt 16,592 6,649 Total current liabilities 493,797 251,489