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What is a current liability? Distinguish between a current liability and a long-term debt. What is the going concern assumption? Does it affect the way liabilities are reported in the financial statements?

What is a contingent liability? List the three categories of contingent liabilities. Are contingent liabilities recorded on a company’s books? Explain.

What is the difference in accounting procedures for a liability that is probable and estimable and one that is reasonably possible but not estimable? What type of liabilities are not recorded on a company’s books?

What effect does recognizing future warranty obligations have on the balance sheet? On the income statement? When is warranty cost reported on the statement of cash flows? Which accounting principles affect how you handle warranty obligations?

What is the difference between an employee and an independent contractor? What is the difference between wages and salaries? What two taxes are components of the FICA tax? What programs do they fund? Who pays the FICA tax? Is there a ceiling on the amount of tax that is paid?

What is the difference between gross pay and net pay? What payroll items are an expense of the business? What payroll items are a liability of the business?

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Bunny Greenfelder
Bunny GreenfelderLv2
28 Sep 2019

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Related questions

Match the following:

1. Acid-test ratio

2. Current portion of long-term debt

3. Recording a contingent liability

4. Commercial paper

5. Deferred revenues

6. Line of credit

7. Accrual accounting

8. Interest expense

9. The riskiness of a business's obligations

10. Disclosure of a contingent liability

A Cash, short-term investments, and accounts receivable alldivided by current liabilities.

B Loss is probable and amount is reasonably estimable.

C Gift cards

D Long-term debt maturing within one year.

E Informal agreement that permits a company to borrow up to aprearranged limit.

F Interest expense is recorded in the period interest isincurred rather than in the period interest is paid

G Loss is reasonably possible and amount is reasonablyestimable

H Incurred on a notes payable

I obligations Unsecured notes sold in minimum denominations of$25,000 with maturities up to 270 days

J Classifying liabilities as either current or long-term helpsinvestors and creditors assess this.

Many contingent liabilities do not appear in the balance sheet and instead are just disclosed in the footnotes to the financial statements. Research one public company’s current financial statement and locate the footnotes on contingent liabilities. Provide an explanation of the types of contingent liabilities included in the footnotes. What is the GAAP accounting rule in order for a liability to be actually recorded and included in the balance sheet section? Why aren’t the liabilities you researched from the footnotes included in the liability section of the balance sheet? Why is it important for users of financial statements to read the footnotes and pay attention to the contingent liability section?

Listed below are several terms and phrases associated with current liabilities. Mach each List A to B

List A

1, Cash, current investments, and A/R all divided by current liabilities.

2, Payment is probable and can be reasonably estimated.

3, Gift cards

4, Long-term debt maturing within one year

5, Social Security and Medicare

6, Interest expense is recorded in the period interest is incurred rather than in the period interest is paid.

7, payment is reasonably possible and can be reasonably estimated.

8, Incurred on a notes payable.

9, Unsecured notes sold in minimum denominations of $25,000 with up to 270 days.

10, Classifying liabilities as either current or long-term helps inverstors and creditors assets this.

List B

a, Recoding a contingentliability

b, disclosure of a contingent liability

c, Interest expense

d, FICA

e, Commercial paper

f, The riskiness of a business's obligations

g, Current portion of Long-term debt

h, Unearned revenue

i, Acid=test ratio

j, Accual Accounting

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