Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following best describes the alternative minimum tax (AMT) as a liability?

It is a current liability that must be paid within one year.

It is a contingent liability that arises only if a company is sued.

It is not considered a liability because it is voluntary.

It is a tax liability that may be either current or non-current, depending on when it is due.

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Verified step by step guidance

Understand the concept of Alternative Minimum Tax (AMT): AMT is a tax system designed to ensure that individuals and corporations pay at least a minimum amount of tax, even if they qualify for certain deductions or credits under the regular tax system.

Recognize that AMT is a tax liability: A liability in accounting refers to an obligation that a company owes, typically involving the payment of money. AMT is a tax obligation that must be paid to the government.

Determine the classification of AMT as current or non-current: A current liability is one that is due within one year, while a non-current liability is due after one year. The classification of AMT depends on the timing of its payment.

Clarify that AMT is not contingent or voluntary: A contingent liability arises only under specific conditions, such as being sued, and AMT does not fall under this category. Additionally, AMT is not voluntary; it is a mandatory tax obligation if applicable.

Conclude that AMT can be either current or non-current: Based on the timing of when the tax is due, AMT may be classified as a current liability (due within one year) or a non-current liability (due after one year).