MC Questions (20 marks) 1. Which of the following is not a characteristic of a liability? A. It represents a probable, future sacrifice of economic benefits. B. It must be payable in cash. C. It arises from present obligations to other entities. D. It results from past transactions or events. 2. Classifying liabilities as either current or long-term helps creditors assess: A. Profitability. B. The relative risk of a firm's liabilities. C. The market value of a firm's shares. D. The amount of a firm's inventory. 3. At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent: A. Liabilities until the product or service is provided. B. A component of shareholders' equity. C. Long-term assets until the product or service is provided. D. Revenue upon receipt of the advance payment. 4. When a deposit on returnable containers is forfeited, the firm holding the deposit will experience: A. A decrease in cost of goods sold. B. An increase in current liabilities. C. An increase in accounts receivable. D. An increase in revenue/income