1. Liabilities are
A.Any accounts having credit balances after closing entries are made.
B.Deferred credits that are recognized and measured in conformity with generally accepted accounting principles.
C.Obligations to transfer ownership shares to other entities in the future.
D.Obligations arising from past transactions and payable in assets or services in the future.

2. Which of the following is a current liability?
A.A long-term debt maturing currently, which is to be paid with cash in a sinking fund?
B.A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue?
C.A long-term debt maturing currently, which is to be converted into common stock?
D.None of these

3.Which of the following is true about accounts payable?
1.Accounts payable should not be reported at their present value.
2.When accounts payable are recorded at the net amount, a Purchase Discounts account will be used.
3.When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used.

A.1
B.2
C.3
D.Both 2 and 3 are true.

4.Among the short-term obligations of ABC Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the DEF National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Lance Company as
A.current liabilities.
B.Deferred charges.
C.Long-term liabilities.
D.Intermediate debt.

5.Which of the following is not true about the discount on short-term notes payable?
A.The Discount on Notes Payable account has a debit balance.
B.The Discount on Notes Payable account should be reported as an asset on the balance sheet.
C.When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate.
D.All of these are true.

6.Which of the following statements is correct?
A.A company may exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis.
B.A company may exclude a short-term obligation from current liabilities if the firm can demonstrate an ability to consummate a refinancing.
C.A company may exclude a short-term obligation from current liabilities if it is paid off after the balance sheet date and subsequently replaced by long-term debt before the balance sheet is issued.
D.None of these.

7.The ability to consummate the refinancing of a short-term obligation may be demonstrated by
A.Actually refinancing the obligation by issuing a long-term obligation after the date of the balance sheet but before it is issued.
B.Entering into a financing agreement that permits the enterprise to refinance the debt on a long-term basis.
C.Actually refinancing the obligation by issuing equity securities after the date of the balance sheet but before it is issued.
D.All of these.

8.Which of the following should not be included in the current liabilities section of the balance sheet?
A.Trade notes payable
B.Short-term zero-interest-bearing notes payable
C.The discount on short-term notes payable
D.All of these are included

9.Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because
A.Most short-term receivables are not interest-bearing.
B.The allowance for uncollectible accounts includes a discount element.
C.The amount of the discount is not material.
D.Most receivables can be sold to a bank or factor.