1) Discuss how are current liabilities related by definition to current assets?

Question

1) Discuss how are current liabilities related by definition to current assets? How are current liabilities related to a company's operating cycle? 2) Discuss the accounting treatment or disclosure that should be accorded a declared but unpaid cash dividend; an accumulated but undeclared dividend on cumulative preferred stock; a stock dividend distributable. 3) Discuss how is the present value related to the concept of a liability? 4) How are the terms "probable," "reasonably possible," and "remote" related to contingent liabilities? Discuss. 5) What factors must be considered in determining whether or not to record a liability for pending litigation? For threatened litigation? Discuss.

Explanation / Answer

The relationship between current assets and current liabilities is an important factor in the analysis of a company’s financial condition. Thus, the definition of current liabilities for a particular industry will depend upon the time period (operating cycle or one year, whichever is longer) used in defining current assets in that industry

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