Question

Which of the following items are normally classified as current liabilities for a company that has a one-year 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.)

Answer 1

Answer:

• Sales tax payable    

• FICA-social security taxes payable due in 40 days  

• Portion of long term note due in 1 month

Explanation:

Current Liabilities refer to obligations owed in a 12 month period. Anything longer is classified as Long Term.

From the options listed the current liabilities will therefore be;

Sales Tax Payable which are the taxes that the government charges on goods and services and it is the responsibility of business to collect these and remit them to the Government on time. This is a current liability as these are remitted quite frequently.

The FICA social security taxes payable due in 40 days is also a current liability due its time period being less than a year.

A portion of a long term loan due in a month will be considered current also due to its time period.