tailieunhanh - Lecture Financial accounting (3/e): Chapter 8 - Spiceland, Thomas, Herrmann

Chapter 8 - Current liabilities. When you finish this chapter, you should: Distinguish between current and long-term liabilities, account for notes payable and interest expense, account for employee and employer payroll liabilities, explain the accounting for other current liabilities, apply the appropriate accounting treatment for contingencies, assess liquidity using current liability ratios. | Current Liabilities Chapter 8 1 Learning Objectives Distinguish between current and long-term liabilities Account for notes payable and interest expense Account for employee and employer payroll liabilities Explain the accounting for other current liabilities Apply the appropriate accounting treatment for contingencies Assess liquidity using current liability ratios Part A Current Liabilities In the four preceding chapters, we worked our way down the asset side of the balance sheet, examining cash, accounts receivable, inventory, and long-term assets. We now turn to the other half of the balance sheet. In this chapter, we will look at current liabilities. 3 Current Liabilities Liability: a present responsibility to sacrifice assets in the future due to a transaction or other event that happened in the past The definition of liabilities touches on the present, the future, and the past. Liabilities have three essential characteristics. Liabilities are: probable future sacrifices of economic benefits arising from present obligations to other entities resulting from past transactions or events. Recall that assets represent probable future benefits. In contrast, liabilities represent probable future sacrifices of benefits. Most liabilities require the future sacrifice of cash. For instance, accounts payable, notes payable, and salaries payable usually are paid in cash. Unearned revenue arises when a company receives payment in advance of providing the product or service it’s selling. This obligation requires giving up inventory or services rather than cash to satisfy the debt. 4 Learning Objective 1 Distinguish between current and long-term liabilities 8-5 Current vs. Long-Term Liabilities In a classified balance sheet, we categorize liabilities as either current or long-term. In most cases, current liabilities are payable within one year, and long-term liabilities are payable more than one year from now. Current liabilities are usually, but not always, due within one . | Current Liabilities Chapter 8 1 Learning Objectives Distinguish between current and long-term liabilities Account for notes payable and interest expense Account for employee and employer payroll liabilities Explain the accounting for other current liabilities Apply the appropriate accounting treatment for contingencies Assess liquidity using current liability ratios Part A Current Liabilities In the four preceding chapters, we worked our way down the asset side of the balance sheet, examining cash, accounts receivable, inventory, and long-term assets. We now turn to the other half of the balance sheet. In this chapter, we will look at current liabilities. 3 Current Liabilities Liability: a present responsibility to sacrifice assets in the future due to a transaction or other event that happened in the past The definition of liabilities touches on the present, the future, and the past. Liabilities have three essential characteristics. Liabilities are: probable future sacrifices of .