Chapter 7 - Accounting for and presentation of liabilities. After reading this chapter, you should be able to answer the following questions: What is the financial statement presentation of short-term debt and current maturities of long-term debt? What is the difference between interest calculated on a straight basis and on a discount basis? What are unearned revenues and how are they presented in the balance sheet?. | © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Accounting: What The Numbers Mean Tenth Edition Marshall, McManus, and Viele Chapter 7 Accounting for and Presentation of Liabilities PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Cynthia J. Rooney, ., CPA Chapter 7: Accounting for and Presentation of Liabilities Liabilities are obligations that represent “probable future sacrifice of economic benefits.” The term accrued expenses is often used on the balance sheet to describe liabilities. Current liabilities are those liabilities that will be paid within one year of the current balance sheet date. LO 1 Nature of Liabilities 7- Learning Objective 1: Show the financial statement presentation of short-term debt and current maturities of long-term debt. Liabilities are obligations that represent probable future sacrifice of economic benefits. The term accrued expenses is often used on the balance sheet to describe liabilities. Current liabilities are those liabilities that will be paid within one year of the current balance sheet date. Current liabilities include: Accounts payable Short-term debt (Notes payable) Current maturities of long-term debt Unearned revenue or deferred credits Other accrued liabilities Noncurrent liabilities include: Long-term debt (Bonds payable) Deferred tax liabilities LO 1 Nature of Liabilities 7- Current liabilities include accounts payable, short-term debt (notes payable), current maturities of long-term debt, unearned revenue or deferred credits, and other accrued liabilities. Noncurrent liabilities include long-term debt (bonds payable), deferred tax liabilities, and minority interest in subsidiaries. Straight Interest Interest = Principal × Rate × Time in years = $25,000 × × 1 = $ 2,250 per year or $ per month Annual Percentage Interest Rate (APR) APR = Interest Paid ÷ Money available × Time = $2,250 ÷ $25,000 × 1 = 9% LO 2 . | © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Accounting: What The Numbers Mean Tenth Edition Marshall, McManus, and Viele Chapter 7 Accounting for and Presentation of Liabilities PowerPoint Authors: Susan Coomer Galbreath, ., CPA Charles W. Caldwell, ., CMA Jon A. Booker, ., CPA, CIA Cynthia J. Rooney, ., CPA Chapter 7: Accounting for and Presentation of Liabilities Liabilities are obligations that represent “probable future sacrifice of economic benefits.” The term accrued expenses is often used on the balance sheet to describe liabilities. Current liabilities are those liabilities that will be paid within one year of the current balance sheet date. LO 1 Nature of Liabilities 7- Learning Objective 1: Show the financial statement presentation of short-term debt and current maturities of long-term debt. Liabilities are obligations that represent probable future sacrifice of economic benefits. The term accrued expenses is often used on the balance .
