I. Multiple Choice Questions. Circle your answer. Do 1 1. All of the following are examples of legal liabilities excep a. notes payable b. sales tax payable sick pay payable (may be taken as time off) d. c. property taxes payable 2. Under current standards of the FASB, liabilities include only legal obligations a. b. both legal and illegal obligations both legal and nonlegal obligations d. c. legal, nonlegal, and illegal obligations 3. On the balance sheet, liabilities are generally classified as a. current or long-term b. legal or nonlegal c. material or immaterial d. probable or estimated