Test Bank for Intermediate Accounting VOLUME 2 4th Edition by Lo Updated

TEST BANK FOR INTERMEDIATE
ACCOUNTING VOLUME 2 4TH
EDITION BY LO

, Intermediate Accounting, Vol. 2, 4e (Lo/Fisher)
Chapter 11 Current Liabilities and Contingencies
Learning Objective 1
1) Which of the following characteristic is required for a liability under IFRS
Framework? A) A past obligation.
B) A present obligation.
C) An unknown obligation.
D) A future obligation.
Answer: B
Diff: 1 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
2) Which of the following characteristic is required for a liability under IFRS
Framework? A) Arises from a past event.
B) Arises from a non-financial transaction.
C) Arises from a future transaction.
D) Arises from a forecasted transaction.
Answer: A
Diff: 1 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
3) Which of the following characteristic is required for a "liability" under IFRS
Framework? A) Expected to result in the inflow of economic benefits.
B) Expected to result in the inflow of economic benefits that are measurable.
C) Expected to result in the outflow of resources embodying economic benefits.
D) Expected to result in the outflow of economic benefits that are virtually certain.

, Answer: C
Diff: 1 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
4) Which of the following groups includes only financial liabilities? A) Accounts
payable, Notes payable, Warranties payable.
B) Bank loan, Bonds payable, Finance lease obligation.
C) Accounts payable, HST payable, Bonds payable.
D) Bank overdraft, USD bank loan, Obligation under customer loyalty plan.
Answer: B
Diff: 1 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
5) Which of the following is correct about a "liability" under IFRS Framework?
A) A future obligation arising from past events, the settlement of which is
expected to result in an inflow of resources.
B) A present obligation arising from past events, the settlement of which is
expected to result in an inflow of resources.
C) A past obligation arising from past events, the settlement of which is
expected to result in an outflow ofresources.
D) A present obligation arising from past events, the settlement of which is
expected to result in an outflow of resources. Answer: D
Diff: 2 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
6) Which is an example of a liability?
A) The decision to borrow $150,000 from the ABC Bank on January 15, 2019.

, B) Withdrawing $10,000 from the operating line of credit on January 15, 2019.
C) Selecting the supplier to provide the raw materials for the manufacturing process.
D) Choosing the site for a future plant expansion from a list of several possible
choices.
Answer: B
Diff: 2 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
7) Which of the following is a financial liability?
A) Amagazine publisher's obligation to provide the magazine monthly for an agreed
upon period.
B) Warranties.

C) Accounts payable.
D) Income taxes payable.
Answer: C
Diff: 2 Type: MC Skill: Concept
Objective: 11.1 Describe the nature of liabilities and differentiate between
financial and non-financial liabilities.
8) Which statement is correct under the IFRS definition for a "liability"?
A) The obligating event must be probable before the liability can be recognized.
B) Theobligating event must be virtually certain before the liability can be
recognized.
C) Areliable measure of the obligation must exist before the liability can be
recognized.
D) Aprecise measure of the obligation must exist before the liability can be
recognized.