Listed below are several terms and phrases associated with current liabilities. Pair each item from List A
Question:
Listed below are several terms and phrases associated with current liabilities. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
1. Interest expense is recorded in the period interest is incurred rather than in the period interest is paid. | a. The riskiness of a business’s obligations. |
2. Payment is reasonably possible and is reasonably estimable. | b. Current portion of long-term debt. |
3. Cash, current investments, and accounts receivable all divided by current liabilities. | c. Recording a contingent liability. |
4. Payment is probable and is reasonably estimable. | d. Disclosure of a contingent liability. |
5. Gift cards. | e. Interest expense. |
6. Long-term debt maturing within one year. | f. FICA. |
7. Social Security and Medicare. | g. Commercial paper. |
8. Unsecured notes sold in minimum denominations of $25,000 with maturities up to 270 days. | h. Acid-test ratio. |
9. Classifying liabilities as either current or long-term helps investors and creditors assess this. | i. Accrual accounting. |
10. Incurred on notes payable. | j. Deferred revenue. |
Step by Step Answer:
Financial Accounting
ISBN: 978-1259914898
5th edition
Authors: David Spiceland, Wayne M. Thomas, Don Herrmann