Current Liabilities The following items represent liabilities on a firms balance sheet: a. An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed. b. An amount of money owed to a creditor on a note due April 30, 2011. c. An amount of money owed to a creditor on a note due August 15, 2012. d. An amount of money owed to employees for work performed during the last week in December. e. An amount of money owed to a bank for the use of borrowed funds due on March 1, 2011. f. An amount of money owed to a creditor as an annual installment payment on a ten-year note. g. An amount of money owed to the federal government based on the companys annual income. Required 1. For each item, state whether it should be classified as a current liability on the December 31, 2010, balance sheet. Assume that the operating cycle is shorter than one year. If the item should not be classified as a current liability, indicate where on the balance sheet it should be presented. 2. For each item identified as a current liability in part (1), state the account title that is normally used to report the item on the balance sheet. 3. Why would an investor or a creditor be interested in whether an item is a current or a long-term liability?
Offcanvas menu