13.01 Payables and Accrued Liabilities

Question 1

What is a liability?

Answer 1

A liability is a present obligation of an entity to transfer an economic benefit. A liability has two essential characteristics: 1. it is a present obligation and 2. the obligation requires an entity to transfer or otherwise provide economic benefits to others.

Question 2

What are the two ways liabilities are classified?

Answer 2

Current - due within one year or due within the operating cycle of the business, whichever is longer
Noncurrent - long-term

Question 3

What are examples of current liabilities?

Answer 3

Accounts payable, salaries payable, dividends payable, income taxes payable, unearned revenue, current portion of LTD

Question 4

What are examples of noncurrent liabilities?

Answer 4

Notes payable, bonds payable, deferred tax liability, short-term debt refinanced to LTD, noncurrent portion of finance lease