The Classification of a Liability as Current or Noncurrent Is

question 113

True/False

The classification of a liability as current or noncurrent is important because it may affect the evaluation of a company's liquidity.

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Definitions:

Depreciation

The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner.

Net Income

The net income of a company once all costs and taxes are deducted from the total revenue.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost. It measures the profitability or efficiency of an investment.

Cost of Capital

The yield a corporation needs to generate from its investment endeavors to keep its market valuation stable and draw in financing.