Developing Your Professional Skills
CriticalThinking Cases
CTLO Nature of Liabilities Presented below is the current liabilities section of Micro Corporation.
$
Current liabilities
Notes payable $ $
Accounts payable
Compensation to employees
Accrued liabilities
Income taxes payable
Current maturities of longterm debt
Total current liabilities $ $
Instructions
Answer the following questions.
What are the essential characteristics that make an item a liability?
How does one distinguish between a current liability and a longterm liability?
What are accrued liabilities? Give three examples of accrued liabilities that Micro might have.
What is the theoretically correct way to value liabilities? How are current liabilities usually valued?
Why are notes payable reported first in the current liabilities section?
What might be the items that comprise Micros liability for Compensation to employees
