A Current Liability Is Always a Short-Term Obligation Expected to Be

question 75

True/False

A current liability is always a short-term obligation expected to be paid within one year of the balance sheet date.

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Definitions:

Variable Costs

Costs that change in proportion to the good or service that a business produces, such as raw materials and direct labor.

Fixed Costs

Costs that do not vary with the level of production or sales volume, such as rent, salaries, and insurance premiums.

Mixed Costs

Expenses that have both fixed and variable components, changing in total with the level of activity but not in proportion.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.