Problem 1-34 Multiple choice

6. Which of the following represents a liability?

a.The obligation to pay for goods that an entity expects to order from suppliers next
year
b.The obligation to provide goods that customers have ordered and paid for during the
current year
c. The obligation to pay interest on a five-year note payable that was issued the last day
of the year
d.The obligation to distribute an entity's own shares
7. Which does not meet the definition of a liability?
a. The signing of a an employment contract at fixed salary
b. An obligation to provide goods or services in the future
c. A note payable with no specified maturity date
d. An obligation that is estimated in amount

8. Which of the following is a characteristic of a current liability but not a noncurrent

liability?

a. Unavoidable obligation.
b. Present obligation to transfer an economic resource.
c. Settlement is expected within the normal operating cycle or within 12 months,
whichever is longer.
d. The obligating event has already occurred.

9. Which of the following is not considered a characteristic of a liability?

a. Present obligation
b. Arises from past event
c. Results in a transfer of economic resource
d. Liquidation is reasonably expected to require use of current assets

10. Which of the following is not an acceptable presentation of current liabilities?

a. Listing current liabilities in the order of maturity
b. Listing current liabilities according to amount
c. Offsetting current liabilities against assets that are to be applied to their liquidation
d. Showing current liabilities in the order of liquidation preference