Regarding Liabilities,which of the Following Statements Is Incorrect

question 87

Multiple Choice

Regarding liabilities,which of the following statements is incorrect?

• A) Liabilities represent one of the two claims to assets.
• B) A creditor who has loaned money to a business has a claim to some of the business's assets until the business pays the debt.
• C) Liabilities are economic resources that are expected to benefit the business in the future.
• D) Many, but not all, liabilities have the word payable in their titles.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Liquidity

The ability of an asset to be quickly converted into cash without significant loss in value.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Income Statement

A financial document that provides a summary of a company's revenues, expenses, and profits over a specific period, detailing its ability to generate earnings.