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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 2
Which of the following is a current liability?
A. None of the choices are correct
B. Notes payable (for which there is an adequate appropriation of retained earnings) due in eleven months
OC.A long-term debt maturing currently, which is to be paid with cash in a sinking fund
O D. A long-term debt maturing currently, which is to be converted into ordinary shares

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solution

correct answer is option B notes payable (for which there is an adequate appropriation of retained earnings ) due in eleven months

explanation

Note payable is due in eleven month which fulfills the condition of payable within next 12 months and there is sufficient appropriation in retained earnings as well .

Hence notes payable (for which there is an adequate appropriation of retained earnings ) due in eleven months is considered to be current liability

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