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Mastering Current Liabilities: A Corporate Finance Quiz

Enhance your understanding of Current Liabilities through this focused quiz. Master key terms and definitions, and assess your ability to identify and manage short-term financial obligations relevant in the corporate finance and...

Questions: 4 | Attempts: 12 | Last updated: Aug 4, 2025

Sample Question 1
Which of the following is a current liability?

A) A long-term debt maturing currently, which is to be paid with cash in a sinking fund

D) None of these

B) A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue

C) A long-term debt maturing currently, which is to be converted into common stock

Sample Question 2
Which of the following is not true about the discount on short-term notes payable?

B) The Discount on Notes Payable account should be reported as an asset on the balance sheet.

A) The Discount on Notes Payable account has a debit balance

D) All of these are true.

C) When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate.

Sample Question 3
Lopez Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2011. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Lopez recall all cans of this paint sold in the last six months. The management of Lopez estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?

D) Appropriation of retained earnings of $800,000

C) Operating expense of $800,000 and liability of $800,000

B) Note disclosure only

A) No recognition

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