Presented below is the current liabilities section of Micro Corporation.

Instructions

Answer the following questions.

a. What are the essential characteristics that make an item a liability?

b. How does one distinguish between a current liability and a long-term liability?

c. What are accrued liabilities? Give three examples of accrued liabilities that Micro might have.

d. What is the theoretically correct way to value liabilities? How are current liabilities usually valued?

e. Why are notes payable reported first in the current liabilities section?

f. What might be the items that comprise Micro?s liability for ?Compensation to employees??

($000) 2021 2020 Current liabilities $ 7,700 $ 68,713 Notes payable Accounts payable Compensation to employees 179,496 101,379 31,649 60,312 Accrued liabilities 158,198 77,621 Income taxes payable 10,486 26,491 Current maturities of long-term debt 16,592 6,649 Total current liabilities $493,797 $251,489