1. Which of the following is a characteristic of a liability? a. It arises from a present obligation. b. It is a probable future benefit. c. It is used to earn profit in a business. d. It includes only those obligations arising from passage of time. e. It is amortized over the life of the debt. 2. Carter Co. placed an order for a machine on January 5. The company received the machine on January 20. The company installed the machine on 29 January and started production from 1 February. The company paid the amount due for the machine on February 5. On which date will Carter recognize the liability for the purchase of machine? a. 5th January b. 20th January c. 29th January d. 1st February c. 5th February 3. Which of the following is most likely to be classified as a noncurent liability? a Bonds Payable b. Accounts Payable c. Interest Payable d. Rent Payable c. Salaries Payable 4. Which of the following is most likely to be classified as a current liability? a. Long-term Leases b. Employee Pension c. Bonds Payable d. Notes Payable e. Unearned Revenue 5. Which of the following will create a noncurrent liability? a. Cash borrowed from a bank to be repaid in 3 years b. Goods sold on credit c. Interest on 12 percent, 5-year bonds due in 6 months d. Rent received in advance for 3 months e. Outstanding salaries for one month 1

1. Which of the following is a chancteristic of a liability? 2. It arises from a present obligation. b. It is a probable future benefit. c. It is used to eam profit in a business. d. It includes only those oblizations arising from passage of time. e. It is amortized over the life of the debt. 2. Curter Co. placed an order for a machine on January 5. The company received the machine on January 20. The company installed the machine on 29 January and started production from 1 February. The company paid the amount due for the machine on February 5. On which date will Carter recognize the liability for the purchase of machine? a. 5t January b. 20 January c. 29 January d. 1 February e. 54 February 3. Which of the following is most likely to be classified as a noncurint liability? 2. Bonds Payable b. Accounts Payable c. Interest Payable d. Rent Payable c. Salaries Rayable 4. Which of the following is most likely to be classified as a current liability? 2. Long-term Leases b. Employee Pension c. Bonds Payable d. Notes Payable e. Uneamed Revenue 5. Which of the following will create a noncurrent llability? a. Cash borrowed from a bank to be repald in 3 years b. Goods sold on credit c. Interest on 12 percent, 5-vear bonds due in 6 months d. Rent recelved in advance for 3 months e. Outstanding salaries for one month