Current liabilities are usually recorded and reported in financial statements at their full maturity value. a. True b. False 2. Discount on Notes Payable is a contra account to Notes Payable on the balance sheet. a. True b. False 3. Which of the following items is a current liability? Bonds to be refunded when due in eight months, the refunding issue. a. there being no doubt about the marketability of b. Bonds due in three years c. Bonds (for which there is an adequate sinking fund property classified as a long-term investment) due in three months. d. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months 4. What is the relationship between current liabilities and a company's operating cycle? a. b. c. d. Current liabilities are the result of operating transactions. Current liabilities can't exceed the amount incurred in one operating cycle. There is no relationship between the two. Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less). Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? . a. Amount of loss is reasonably estimable and occurrence of event is probable. b. Event is unusual in nature and event occurs infrequently c. Event is unusual in nature and occurrence of event is probable. d. Amount of loss is reasonably estimable and event occurs infrequently. Why is the liability section of the balance sheet of primary importance to bankers? a. To evaluate operating efficiency. b. To evaluate the entity's credit quality. c. To assist in understanding the entity's liquidity d. To better understand sources of repayment