BUS 251 Chapter Notes - Chapter 9: Contingent Liability, Current Liability, The Monthly
12 Dec 2014
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Must have all of the following characteristics: o o. It is an obligation that imposes an economic burden (requires the transfer of assets, the performance of services, or the conferring of some other benefits) The company has little or no discretion to avoid the obligation. If the entity doesn"t settle it, the creditor usually has the right to pursue legal action. It is resulted from a past transaction or event o. To avoid uncertainty about the amount and timing of the settlement, some liabilities have fixed payment schedules and due date. Contracts: mutually unexecuted contract at the time of signing, neither the buyer nor the seller have performed their part of the contract. Not recorded in the accounting system, but may include information in the notes to its financial statement o. Partially executed contract one party has performed part or all of its obligation. Recorded in the accounting system to the according liability account.
