The Classification of Liabilities on the Basis of Timing of Settlement,i.e.current

question 27

Multiple Choice

The classification of liabilities on the basis of timing of settlement,i.e.current and non-current,is useful as it helps decision-makers assess the firm's ability to meet all of the following except:

• A)Commitments which are part of the operating cycle
• B)Capital repayments
• C)Dividends
• D)Profitability

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Definitions:

Production Possibilities Schedule

A graphical representation that shows the different combinations of two goods or services that can be produced within a given time period, provided that available resources and technology are static.

Consumer Goods

Goods that are produced for direct consumption by the end user.

Capital Goods

Long-term assets purchased by businesses to produce goods and services.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources), assuming all resources are fully utilized.