1. Which of the following is NOT a current liability?

Payments received in advance.

Payments made in advance

All of these are current liabilities

Salaries due to employees

Payments due to suppliers

2. Basset Company was recently sued by several of its customers. Bassets legal counsel has determined that it is possible that Basset will lose the case and, if they do lose, the amount of the loss would be between $60,000 and $150,000. How would Basset record this liability on their balance sheet?

They would accrue a liability of $150,000 and disclose that the low end of the loss is $60,000.

They would only make a note disclosure of the loss.

They would not record anything since the lawsuit has not yet been settled.

They would accrue a liability of $60,000 and disclose that the loss could be as high as $150,000.

3. Everclean Company was recently cited for dumping potentially hazardous chemicals in the local waterway. It is probable that Everclean will be fined by the EPA, but the amount of the fine is not readily determinable. How would Everclean report this event on their financial statements

Everclean would make their best estimate of the amount of the total loss and accrue the total amount on the Balance Sheet.

Everclean would make a note disclosure of the possible loss, but would not accrue anything on the Balance Sheet.

Everclean would make their best estimate of the amount of the total loss and accrue the low end of the amount on the Balance Sheet.

Everclean would not accrue or disclose this potential loss on their financials until the lawsuit is settled.