(BQ) Part 2 book "Financial accounting demystified" has contents: Accounting for liabilities, accounting for stockholders' equity, statement of cash flows, financial statement analysis. | chapte r 10 Accounting for Liabilities CHAPTER OBJECTIVES The purposes of this chapter are to • • • • • • • Define the types of current liabilities and explain how they are recorded Define the types of long-term liabilities Explain the accounting for long-term and short-term notes payable Define the types of bonds Explain the accounting for the issuance of bonds Explain the accounting for interest on bonds payable Summarize the accounting for leases Introduction Liabilities are obligations of a business enterprise arising from past transactions or events. They require settlement by making future payment of cash or other resources. Liabilities may be current, noncurrent, or long term. Current and long-term liabilities will now be discussed in more detail. 159 160 F I N A N C I A L A CCO U N T I N G De MYS TiFieD Current Liabilities Current liabilities are debts and obligations of the business that are typically settled by expending cash or another current asset within the next year or operating cycle, whichever period is longer. Typical current liabilities are shown in Exhibit . Accounts Payable, Notes Payable, and payroll-related payables are discussed and illustrated further in the paragraphs that follow. EXHIBIT A Summary of the Types of Current Liabilities Type Definition Examples Accounts payable Obligations that arise from the purchase of goods or services that have been charged on an open account Suppliers, wholesalers, consulting services, and insurance Notes payable An unconditional written agreement to pay a sum of money within up to one year, with interest, to the bearer on a specific date Notes from borrowing money at banks. Notes from acquiring goods or fixed assets payable within one year Payroll related Expenses or withholdings related to employee payroll owed to federal or state governments, unions, and other parties Involuntary taxes withheld from employees. Employer match for FICA and Medicare, currently (2011), .
