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What is a discount as it relates to zero-interest-bearing 



1.	What is the relationship between current liabilities and a company's operating cycle?
a.	Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less).
b.	Current liabilities are the result of operating transactions.
c.	Current liabilities can't exceed the amount incurred in one operating cycle.
d.	There is no relationship between the two.

	2.	What is the relationship between present value and the concept of a liability?
a.	Present values are used to measure certain liabilities.
b.	Present values are not used to measure liabilities.
c.	Present values are used to measure all liabilities.
d.	Present values are only used to measure long-term liabilities.

	3.	What is a discount as it relates to zero-interest-bearing notes payable?
a.	The discount represents the lender's costs to underwrite the note.
b.	The discount represents the credit quality of the borrower.
c.	The discount represents the cost of borrowing.
d.	The discount represents the allowance for uncollectible amounts.

	4.	Where is debt callable by the creditor reported on the debtor's financial statements?
a.	Long-term liability.
b.	Current liability if the creditor intends to call the debt within the year, otherwise a long-term liability.
c.	Current liability if it is probable that creditor will call the debt within the year, otherwise a long-term liability.
d.	Current liability.
	5.	Which of the following is not a condition necessary to exclude a short-term obligation from current liabilities?
a.	Intend to refinance the obligation on a long-term basis.
b.	Obligation must be due with one year.
c.	Demonstrate the ability to complete the refinancing.
d.	Subsequently refinance the obligation on a long-term basis.





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