Chapter 13 - Current liabilities and contingencies. After reading the material in this chapter, you should be able to: Define liabilities and distinguish between current and long-term liabilities, account for the issuance and payment of various forms of notes and record the interest on the notes, characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded,. | Current Liabilities and Contingencies 13 Insert Book Cover Picture Chapter 13: Current Liabilities and Contingencies Learning Objectives Define liabilities and distinguish between current and long-term liabilities. LO1 Our first learning objective in Chapter 13 is to define liabilities and distinguish between current and long-term liabilities Liabilities . . . Resulting from past transactions or events. . . . Arising from present obligations to other entities . . . Probable future sacrifices of economic benefits . . . Liabilities have three essential characteristics. Liabilities: Are probable, future sacrifices of economic benefits. Arise from present obligations to transfer goods or provide services to other entities. Result from past transactions or events. What is a Current Liability? LIABILITIES Long-term Liabilities Expected to be satisfied with current assets or by the creation of other current liabilities. Current Liabilities Obligations payable within one year or one operating cycle, whichever is longer. In a classified balance sheet, liabilities are categorized as either current liabilities or long-term liabilities. The general definition of a current liability is an obligation payable within one year or within the company’s operating cycle, whichever is longer. Another, more discriminating, definition identifies a current liability as an obligation expected to be satisfied with current assets or by the creation of other current liabilities. Current Liabilities Current Liabilities Short-term notes payable Accrued expenses Cash dividends payable Taxes payable Accounts payable Unearned revenues Examples of obligations reported as current liabilities are: Accounts payable. Taxes payable, Unearned revenues. Cash dividends payable. Accrued expenses. Short-term notes payable. Open Accounts and Notes Accounts Payable Obligations to suppliers for goods purchased on open account. Trade Notes Payable Similar to accounts payable, but recognized by a written . | Current Liabilities and Contingencies 13 Insert Book Cover Picture Chapter 13: Current Liabilities and Contingencies Learning Objectives Define liabilities and distinguish between current and long-term liabilities. LO1 Our first learning objective in Chapter 13 is to define liabilities and distinguish between current and long-term liabilities Liabilities . . . Resulting from past transactions or events. . . . Arising from present obligations to other entities . . . Probable future sacrifices of economic benefits . . . Liabilities have three essential characteristics. Liabilities: Are probable, future sacrifices of economic benefits. Arise from present obligations to transfer goods or provide services to other entities. Result from past transactions or events. What is a Current Liability? LIABILITIES Long-term Liabilities Expected to be satisfied with current assets or by the creation of other current liabilities. Current Liabilities Obligations payable within one year or one .
