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Concept explainers
Liability:
Liability is the financial obligation or debt that happens at the time of running the business. Liability is broadly classified into two; current liability and long-term liability.
Long-term liability:
Long-term liabilities are the debt or obligation due only after one year. Bonds payable and mortgage payable are the examples of long-term liabilities.
Current liability:
Current liabilities are the debt or obligation due within one year. Accounts payable, accrued wages and taxes payable are the examples of current liabilities.
To Explain: If the belief of LR that a current liability is a debt, that is paid within one year is correct or not.
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Answer to Problem 1Q
Solution:
Yes, LR is correct. Current liability is a debt that can be expected to be paid within one year.
Explanation of Solution
Current liabilities are the debt or obligation that can be paid within one year. If the debt can be paid more than one year is not coming under the category of current liabilities.
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Chapter 10 Solutions
Financial Accounting 9e Binder Ready Version + WileyPLUS Registration Card
- Tulsa's gross profit percentage is:arrow_forwardWhat is the correct answer general Accountingarrow_forwardDepartment A had 15,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period; 45,600 units of direct materials were added during the period; 42,500 units were completed during the period, and 11,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was ____ Units.arrow_forward
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