Answer to Question #244241 in Accounting for samantha

Question

Directions: Answer the following questions with the most correct answer whether the selection is in multiple-choice or supply the answer.

1. Which of the following attributes will classify an item which can be seen as a liability in
the Statement of Financial Position?
a.Expenses paid before the actual utilization
B. Expenses already utilized and paid for.
c.Expenses already utilized but have not yet paid for
D. All expenses cannot be classified as a liability component

4. If the normal operating cycle is 8 months to August 30, 2023, and the 12 months after the
reporting period will jump to the date of December 31, 2023, when is the threshold of
proving that the asset or liability is current? (Pick between August 30, 2023, and
December 31, 2023, only Explain your position.

Answer 1

Solution:

1.). The correct answer is C. Expenses already utilized but have not paid for.

These expenses are normally known as accrued liability and are not posted under current liability on the Statement of Financial Position.

 

4.). The threshold of proving that the asset or liability is current is by checking whether the said asset or liability falls within the current financial year which is normally 1 year. If the payment for an asset can be received within August 2023 and December 2023, then it is a current asset and if the liability can be paid within the year between August 2023 and December 2023, then it is a current liability.