17. Under the expense warranty approach, companies charge warranty costs only to the period in which they comply with the warranty.
18. Prepaid insurance should be included in the numerator when computing the acid-test( quick) ratio.
19. Paying a current liability with cash will always reduce the current ratio.
20. Current liabilities are usually recorded and reported in financial statements at their full maturity value.
True False Answers— Conceptual
MULTIPLE CHOICE— Conceptual 21. Liabilities are a. any accounts having credit balances after closing entries are made.
b. deferred credits that are recognized and measured in conformity with generally accepted accounting principles.
c. obligations to transfer ownership shares to other entities in the future.
d. obligations arising from past transactions and payable in assets or services in the future.