LIABILITIES Flashcards
Present obligations of an entity to transfer an economic resource as a result of past events
Liabilities
What are the 10 examples of Liabilities?
- Accounts Payable
- Amounts withheld from employees
- Accrued expenses
- Cash dividends declared but not paid
- Deposits and advances from customers
- Mortgage payable
- Bonds payable
- Notes payable
- Income tax payable
- Unearned revenue
Liabilities are initially measured at
present value
Liabilities are subsequently measured at
amortized cost
In practice, current liabilities are measured at
face amount
Noncurrent liabilities such as bonds payable and noninterest-bearing note payable are initially AND subsequently measured at
amortized cost
If long-term interest bearing note, it is measured at
face amount
Current Liabilities examples (6)
- A/P
- N/P
- Income tax payable
- Withholding tax payable
- Accrued expenses
- Unearned revenues
Noncurrent Liabilities examples
- Long-term notes payable
- Finance lease liability
- Deferred tax liability
- Long-term obligation to officers
- Long-term deferred revenue
Attached to borrowing agreements which represent undertakings by the borrower
Covenant
If these covenants are breached…
the liability becomes payable on demand
Obligations which exist at the end of the reporting period although their amount is not definite
Estimated liabilities
Estimated liabilities are either
current or noncurrent liabilities
What is unearned revenue?
Revenue already received but not yet earned
What are gift certificates payable?
a liability that provides goods at a future date
