Multiple Choice
In the context of financial accounting, what will the beneficiary typically receive if an annuitant dies before the annuity payments have been fully distributed?
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9. Current Liabilities
Types of Liabilities
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Fixed period settlement options are considered to be a form of a(n):
A
Accrued liability
B
Contingent liability
C
Current liability
D
Long-term liability
Verified step by step guidance1
Understand the concept of liabilities: Liabilities are obligations that a company owes to external parties. They are classified into different categories based on their nature and timing of settlement.
Review the types of liabilities: Accrued liabilities are expenses incurred but not yet paid, contingent liabilities depend on future events, current liabilities are obligations due within one year, and long-term liabilities are obligations due after one year.
Analyze the term 'fixed period settlement options': These are obligations that are settled over a fixed period, typically extending beyond one year, which aligns with the definition of long-term liabilities.
Compare the characteristics of fixed period settlement options with the definitions of accrued, contingent, current, and long-term liabilities to determine the correct classification.
Conclude that fixed period settlement options are classified as long-term liabilities because they are obligations that extend beyond the current operating cycle or one year.
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