Lobrigas, Claudine L.

BSIA-IV

Intermediate Accounting 2

Pretest:

Directions: Read and analyze each item. Provide the letter of your answer. Encode your

answer in a separate word file and submit in the classwork section of our google class on

or before the date as reflected in your study schedule. Please follow the format in naming

the file for submission: Lastname_Unit1_Pretest

1. The most common type of liability is

d. One to be paid in cash and for which the amount and timing are known.

2. Classifying liabilities as either current or noncurrent helps creditors assess

c. The degree of an entity’s liabilities

3. Which of the following represents a liability?

b. The obligation to provide goods that customers have ordered and paid for during the
current year

4. Which does not meet the definition of a liability?

a. The signing of an employment contract at fixed salary

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

c. Settlement is expected within the normal operating cycle within 12 months, whichever
is longer.

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

c. Offsetting current liabilities against assets that are to be applied to their liquidation

7. Which is not a characteristic of a liability?

d. It results from past transaction or event.

8. Among the short-term obligations at year-end are 90-day notes, renewable for another 90-
day period. What is the classification of the notes payable?
 a. Current liabilities

9. An entity has a loan due for repayment in six months’ time, but the entity has the option to
refinance for repayment two years later. The entity plans to refinance this loan. In which
section of the statement of financial position should this loan be presented?

c. Noncurrent liabilities

10. At year-end, an entity classified a note payable as current liability. Under what condition
could the entity reclassify the note payable from current to noncurrent?

a. If the entity has the intent and ability to reclassify the note before the end of reporting
period.