In the Case of Classifying a Liability as Current or Non-Current,what

question 8

Multiple Choice

In the case of classifying a liability as current or non-current,what approach does AASB 101 require if there is no clearly identifiable operating cycle?

• A) The most common length of operating cycle for other entities in a comparable industry must be used.
• B) The operating cycle of the event that gave rise to the creation of the liability must be used as the basis for determining the liability's operating cycle.
• C) The 12 month period from the reporting date must be used.
• D) The average operating cycle length over all operations of the entity must be used.
• E) None of the given answers.

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Definitions:

Wages

Monetary compensation paid by an employer to an employee in exchange for work performed.

Long-Run Phillips Curve

A graphical representation suggesting that in the long term, there is no trade-off between inflation and unemployment, showing vertical at the natural rate of unemployment.

Unemployment Rate

The percentage of those in the labor force who are not working but are in search of employment.

Natural Rate

Often refers to the natural rate of unemployment, which is the level of unemployment consistent with a stable rate of inflation, not zero unemployment.