An Example of an Item That Is Not a Liability

question 29

Multiple Choice

An example of an item that is not a liability is

• A) Dividends payable in stock
• B) Advances from customers on contracts
• C) Accrued estimated warranty costs
• D) The portion of long-term debt due within one year

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Definitions:

Gross Profit Percentage

A financial metric that represents the gross profit as a percentage of net sales, indicating the efficiency of a company's production process.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle if longer than a year.

Short-term Note

A financial instrument typically due for repayment within one year, often used for short-term financing needs.