Which of the Following Statements Is True

question 54

Multiple Choice

Which of the following statements is true?

• A) If ability to refinance a currently maturing obligation is present, the obligation should be classified as noncurrent debt.
• B) If no reasonable estimate can be made of the minimum amount expected to be available for future refinancing, the entire outstanding short-term obligation must be disclosed as a noncurrent obligation.
• C) The FASB has concluded that obligations that are due on demand should be classified as current liabilities, even though liquidation of the liabilities is not expected within the next year or operating cycle, whichever is longer.
• D) If a refinancing is soon to be accomplished by issuing common stock, a currently maturing short-term obligation should be included in shareholders' equity on the current balance sheet.

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Definitions:

Direct Labor Hours

Direct labor hours are the total hours worked by employees directly involved in the production of goods or services.

Overhead Rate

The rate at which indirect costs are allocated to produced goods or services.

Direct Labor Dollar

The total cost of wages paid to workers who are directly involved in the production of goods or delivery of services.

Rent Expense

The cost incurred for leasing or renting property or equipment, considered an operating expense in accounting.