Which of the following items are normally classified as current liabilities for

Question

Which of the following items are normally classified as current liabilities for a company that has a 15-month operating cycle? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

Portion of long-term note due in 15 months.

Note payable maturing in 2 years.

Note payable due in 18 months.

Note payable due in 11 months.

FICA taxes payable.

Salaries payable.

Explanation / Answer

• Current Liabilities (also called short-term liabilities)

1. Expected to be paid within one year or the company's operating cycle, whichever is longer

2. Examples: lease liabilities, taxes payable, unearned revenue, accounts payable, short term notes payable, wages payable, warranty liabilities.

3. Improper classification can distort ratios used in financial statement analysis and business decisions

=>> following items are normally classified as current liabilities for a company that has a 15-month operating cycle :-

• Portion of long-term note due in 15 months.

• Note payable due in 11 months.

• Salaries payable.

• FICA taxes payable. :- FICA tax payable is the amount of unpaid social security and Medicare taxes that a business owes to the federal government. This amount is the largest portion of all payroll taxes owed to the government. It is classified as a current liability, since it is payable within a few days.

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