Which of the Following Liabilities Requires the Use of an Estimate

question 36

Multiple Choice

Which of the following liabilities requires the use of an estimate when it is initially recorded?

• A)Wages Payable
• B)Unearned Revenue
• C)Warranty Provision
• D)Accounts Payable

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Definitions:

Income Statement

A financial document that reports a company's revenues, expenses, and profit over a specified time period.

Cash Balance

The amount of cash a company has available at any given time, reflecting its liquidity.

Payroll

The total amount of wages, salaries, and other earnings that a business pays to its employees.

Liquidity Ratios

Financial ratios used to measure a firm’s ability to meet its short-term obligations to creditors as they come due.