Presented below is the current liabilities section of Micro Corporation. ($000) 000 2021 000 2020 Current liabilities Notes payable $ 68,713 $ 7,700 Accounts payable 179,496 101,379 Compensation to employees 60,312 31,649 Accrued liabilities 158,198 77,621 Income taxes payable 10,486 26,491 Current maturities of long-term debt $416,592 $416,649 Total current liabilities $493,797 $251,489 Instructions Answer the following questions. a. What are the essential characteristics that make an item a liability? b. How does one distinguish between a current liability and a long-term liability? c. What are accrued liabilities? Give three examples of accrued liabilities that Micro might have. d. What is the theoretically correct way to value liabilities? How are current liabilities usually valued? e. Why are notes payable reported first in the current liabilities section? f. What might be the items that comprise Micro’s liability for “Compensation to employees”?

Presented below is the current liabilities section of Micro Corporation. ($000) 000 2021 000 2020 Current liabilities Notes payable $ 68,713 $ 7,700 Accounts payable 179,496 101,379 Compensation to employees 60,312 31,649 Accrued liabilities 158,198 77,621 Income taxes payable 10,486 26,491 Current maturities of long-term debt $416,592 $416,649 Total current liabilities $493,797 $251,489 Instructions Answer the following questions. a. What are the essential characteristics that make an item a liability? b. How does one distinguish between a current liability and a long-term liability? c. What are accrued liabilities? Give three examples of accrued liabilities that Micro might have. d. What is the theoretically correct way to value liabilities? How are current liabilities usually valued? e. Why are notes payable reported first in the current liabilities section? f. What might be the items that comprise Micro’s liability for “Compensation to employees”?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 91PSB

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Instructions

Answer the following questions.

a. What are the essential characteristics that make an item a liability?

b. How does one distinguish between a current liability and a long-term liability?

c. What are accrued liabilities? Give three examples of accrued liabilities that Micro might have.

d. What is the theoretically correct way to value liabilities? How are current liabilities usually valued?

e. Why are notes payable reported first in the current liabilities section?

f. What might be the items that comprise Micro’s liability for “Compensation to employees”?

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		($000)
	000	2021	000	2020
Current liabilities
Notes payable	$ 68,713	$ 7,700
Accounts payable	179,496	101,379
Compensation to employees	60,312	31,649
Accrued liabilities	158,198	77,621
Income taxes payable	10,486	26,491
Current maturities of long-term debt	$416,592	$416,649
Total current liabilities	$493,797	$251,489