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14. The expected profit from a sales type warranty that covers
several years should all be recognized in the period the warranty is
sold.
15. The fair value of an asset retirement obligation is recorded as
both an increase to the related asset and a liability.
16. The cause for litigation must have occurred on or before the
date of the financial statements to report a liability in the financial
statements.
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