Question Details

Companies report current liabilities on the statement of financial position 



1.	Aragon Corporation issues CHF1,000,000, 6%, 5-year bonds on January 1, 2011, for CHF1,012,500. Interest is paid annually on January 1. If Aragon uses the straight-line method to amortize bond discount and premium, the amount of bond interest expense to be accrued at December 31, 2011 is
a.	CHF62,000.
b.	CHF60,000.
c.	CHF57,500.
d.	CHF0.


2.	A current liability is a debt the company reasonably expects to pay from existing current assets within
a.	one year.
b.	the operating cycle.
c.	one year or the operating cycle, whichever is longer.
d.	one year or the operating cycle, whichever is shorter.


	
3.		Which of the following statements concerning current liabilities is incorrect?
a.	Current liabilities include unearned revenues.
b.	A company that has more current liabilities than current assets is usually the subject of some concern.
c.	Current liabilities include prepaid expenses.
d.	A current liability is a debt that can reasonably be expected to be paid out of existing current assets or result in the creation of other current liabilities.


	4.	On August 1, 2010, a company borrowed cash and signed a one-year interest-bearing note on which both the face value and interest are payable on August 1, 2011. How will the note payable and the related interest be classified in the December 31, 2010, statement of financial position?
	Note Payable	Interest Payable
a.	Current liability	Non-current liability
b.	Non-current liability	Current liability
c.	Current liability	Current liability
d.	Non-current liability	Not shown


5.	Companies report current liabilities on the statement of financial position in
a.	alphabetical order.
b.	order of maturity.
c.	random order.
d.	order of magnitude.



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