Chapter 13 deals with short-term liabilities. In Part A of the chapter, the focus is on liabilities that are classified appropriately as current. In Part B of the chapter, we turn our attention to situations in which there is uncertainty as to whether an obligation really exists. These are designated as loss contingencies. Some loss contingencies are accrued as liabilities, but others only are disclosed in the notes. | Chapter 13 Current Liabilities and Contingencies Chapter 13: Current Liabilities and Contingencies. Chapter 13 deals with short-term liabilities. In Part A of the chapter, the focus is on liabilities that are classified appropriately as current. In Part B of the chapter, we turn our attention to situations in which there is uncertainty as to whether an obligation really exists. These are designated as loss contingencies. Some loss contingencies are accrued as liabilities, but others only are disclosed in the notes. Characteristics of Liabilities Result from past transactions or events. Arise from present obligations to other entities. Probable future sacrifices of economic benefits. Most liabilities obligate the debtor to pay cash at specified times and result from legally enforceable agreements. 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, we categorize liabilities 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. Liabilities should be recorded at their present values, but the relatively short-term maturity of current liabilities makes the time value component immaterial. Current Liabilities Current Liabilities Short-term notes payable Accrued . | Chapter 13 Current Liabilities and Contingencies Chapter 13: Current Liabilities and Contingencies. Chapter 13 deals with short-term liabilities. In Part A of the chapter, the focus is on liabilities that are classified appropriately as current. In Part B of the chapter, we turn our attention to situations in which there is uncertainty as to whether an obligation really exists. These are designated as loss contingencies. Some loss contingencies are accrued as liabilities, but others only are disclosed in the notes. Characteristics of Liabilities Result from past transactions or events. Arise from present obligations to other entities. Probable future sacrifices of economic benefits. Most liabilities obligate the debtor to pay cash at specified times and result from legally enforceable agreements. Liabilities have three essential characteristics. Liabilities: Are probable, future sacrifices of economic benefits. Arise from present obligations to transfer goods or provide services .
