A Transaction That Is Likely to Cause an Increase in a Current

question 18

Multiple Choice

A transaction that is likely to cause an increase in a current liability is:

• A)payment of accrued wages.
• B)accrual of interest expense.
• C)depreciation of equipment.
• D)accrual of bad debts expense.

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Definitions:

Short-Term Investment-AFS

Refers to Available-for-Sale short-term investments that are not classified as held-to-maturity or trading, and can be sold in response to liquidity needs or changes in interest rates.

Available-for-Sale Debt Securities

Debt securities not classified as held-to-maturity or trading securities, and are thus recorded at fair value with changes reflected in other comprehensive income.

Historical Cost

The original monetary value of an asset, reflecting its cost at the time of acquisition, not adjusted for inflation or changes in market value.

Amortized Amount

The portion of a loan or intangible asset's cost that has been allocated as an expense over a specific period.