ACCOUNTING 224 – FINANCIAL ACCOUNTING REPORTING PART 2 PDF

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ACCOUNTING 224 – FINANCIAL ACCOUNTING REPORTING PART 2 Non-financial liabilities are initially measured at the best estimate of the amounts needed to settle those obligations or the measurement basis required by other applicable standard. ANSWER: TRUE A current liability may be classified as a long-...

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ACCOUNTING 224 – FINANCIAL ACCOUNTING REPORTING PART 2

1. Non-financial liabilities are initially measured at the best estimate of the amounts needed to settle those obligations or the measurement basis required by other applicable standard. ANSWER: TRUE 2. A current liability may be classified as a long-term liability if the entity has the intention to refinance it after the balance sheet date ANSWER: FALSE 3. Trade notes payable are normally presented as current liabilities. ANSWER: TRUE 4. A debtor firm’s 12/31/05 balance sheet is to be published 3/1/06. An obligation with a due date of 3/4/11 is also due on demand by the creditor. At 12/31/05, there is no indication that the creditor intends to call in the debt. The obligation is a current liability. ANSWER: TRUE 5. Unearned revenue is considered a financial liability. ANSWER: FALSE 6. The fact that a liability is used to fund trading activities does not in itself make that liability one that is held for trading. ANSWER: TRUE 7. Since a dividend is generally paid within a month or so, it usually is classified as current. ANSWER: TRUE 8. All liabilities must be due within 12 months of the current balance sheet to be classified as current liabilities. ANSWER: FALSE 9. Deposits taken from customers by public utilities should always be reported as current liabilities by the utility. ANSWER: FALSE 10. Financial liabilities are initially measured at fair value plus direct costs, except for financial liabilities that are classified as financial liabilities measured at fair value through profit or loss, whose transaction costs are expensed immediately. ANSWER: FALSE...