Note – Please take our quiz ‘Quiz 22 – Current Liabilities – (Answers)‘ on this page before going through the below answers. Only the top 3% of our audience scored 10/10 in all of them.
- Name – Quiz 22 – Current Liabilities – (Answers)
- Topic – Current Liabilities
- Answers with Explanation
Q1. Current liabilities are shown in _____.
Ans. Current liabilities are shown on the liability side of a balance sheet.
Q2. Part of long-term loan which is payable within the current year becomes a current liability.
Ans. The given statement is True. An instalment payable within one year (same accounting period) is shown as payable (due) which means that it becomes a current liability whereas the remaining loan is still a long-term liability and shows under the appropriate head in the balance sheet.
Q3. Paying trade payables increases the current liabilities of a business.
Ans. The given statement is False. Payment of trade payables reduces the current liabilities of a firm.
Q4. Working capital increases with rise in current liabilities.
Ans. The given statement is False. Working capital will reduce with rising current liabilities this is because of the formula i.e. WC = Current Assets – Current Liabilities. Higher CL = Lower WC.
Q5. Current liabilities = _____, if Bank Overdraft = 5,000, Debentures = 3,000, Accounts Payable = 2,000.
Ans. In this case, current liabilities = bank overdraft + payables = 5,000 + 2,000 = 7,000.
Q6. Wages payable is a current liability.
Ans. The given statement is False. Wages due are short-term therefore they are current liabilities for the business.
Q7. Bank overdraft is a current liability.
Ans. The given statement is True. Bank overdraft is often a short-term liability.
Q8. Which of these is a current liability?
Ans. Interest payable is the most likely current liability from this list.
Q9. Which of the following is not a current liability?
Ans. Debentures are long-term liabilities.
Q10. _____ is a current liability.
Ans. Account payable is an example of current liabilities.
Q11. Companies mostly utilize _____ to pay off current liabilities.
Ans. Current liabilities are eliminated by current assets or by the introduction of new short-term liabilities.
Q12. Mostly, current liabilities are _____ obligations.
Ans. Current liabilities are short-term obligations of a business.
Q13. Current liabilities are obligations of a company which are payable _____.
Ans. These are obligations of a company which are payable within a year or within the accounting cycle of a firm.
