1 A current liability is any obligation of a business #726

1. A current liability is any obligation of a business that:a. is expected to be satisfied or paid

within six months.b. is expected to be satisfied or paid within two years.c. a business will not be
able to pay off.d. is expected to be satisfied or paid within one year.2. Floyd Corporation sells
merchandise to a customer who pays $500 for the merchandise and $40 in sales tax. What
amount will Floyd Corporation record as sales?a. $500b. $540c. $460d. $5203. Which of the
following is not a type of tax that is commonly withheld from an employee's paycheck?a.
Federal Income Taxb. FICA Taxc. Contribution Taxd. State Income Tax4. Which of the following
statements is true?i. A note payable can be classified as a current or long-term liability.ii. Taxes
payable are never current liabilities.a. i onlyb. ii onlyc. Both i and iid. Neither i nor ii5. A company
issues a $2,000 6% note payable due in 4 months. How much interest will the company pay for
this note?a. $120b. $0c. $30d. $406. When will Long-Term Debt be considered a current
liability?a. Neverb. In the first year of its issuancec. Alwaysd. Whatever portion of the debt is
due within one year of the balance sheet date will be considered current7. Cash flows
associated with long-term liabilities are reported:a. in the operating activities section of the
statement of cash flows.b. in the investing activities section of the statement of cash flows.c. in
the financing activities section of the statement of cash flows.d. on the balance sheet.8. Which
of the following is a financial instrument used by an entity to borrow money?a. Bondb. Checkc.
Cashd. Note ReceivableView Solution:
1 A current liability is any obligation of a business

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