Fundamental Accounting Principles 14th Canadian Edition Volume 2 By Larson – Test Bank

c11 Key

1. A liability is a future payment of assets or services that a company is currently obligated to make as a result of past transactions or events.
TRUE

Difficulty: Easy
Larson – Chapter 11 #1
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

2. A company’s obligations not expected to be paid within the longer of one year of the balance sheet date or the next operating cycle are reported as current liabilities.
FALSE

Difficulty: Easy
Larson – Chapter 11 #2
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

3. All expected future payments are liabilities.
FALSE

Difficulty: Moderate
Larson – Chapter 11 #3
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

4. A liability exists because of a past event that creates a future obligation for future sacrifices.
FALSE

Difficulty: Hard
Larson – Chapter 11 #4
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

5. Long-term liabilities are obligations of a company requiring payment within one year.
FALSE

Difficulty: Easy
Larson – Chapter 11 #5
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

6. A long-term liability can have a current component.
TRUE

Difficulty: Moderate
Larson – Chapter 11 #6
Learning Objective: 11-01 Describe the characteristics of liabilities and explain the difference between current and long-term liabilities.
Type: Knowledge

7. Amounts received in advance from a customer for future products or services are initially recorded as liabilities.
TRUE

Difficulty: Easy
Larson – Chapter 11 #7
Learning Objective: 11-02 Identify and describe known current liabilities.
Type: Knowledge

8. Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.
TRUE

Difficulty: Easy
Larson – Chapter 11 #8
Learning Objective: 11-02 Identify and describe known current liabilities.
Type: Knowledge

9. Unearned revenue is another name for sales revenue.
FALSE

Difficulty: Easy
Larson – Chapter 11 #9
Learning Objective: 11-02 Identify and describe known current liabilities.
Type: Knowledge

10. Sales taxes payable is credited and cash is debited when firms send sales taxes collected from customers to the government.
FALSE

Difficulty: Moderate
Larson – Chapter 11 #10
Learning Objective: 11-02 Identify and describe known current liabilities.
Type: Knowledge