d. Transaction or other event creating the liability has already occurred.
34. Which of the following is not considered a part of the definition of a liability?
a. Unavoidable obligation.
b. Transaction or other event creating the liability has already occurred.
c. Present obligation that entails settlement by probable future transfer or use of cash, goods, or services.
d. Liquidation is reasonably expected to require use of existing resources classified as current assets or create other current liabilities.
35. Why is the liability section of the balance sheet of primary importance to bankers?
a. To evaluate the entity ' s credit quality. b. To assist in understanding the entity ' s liquidity. c. To better understand sources of repayment. d. To evaluate operating efficiency.
36. 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.