After studying Chapter 10, you should be able to:
- Define liabilities and distinguish between current and long-term liabilities.
- Account for notes payable and interest expense.
- Describe the costs relating to payrolls.
- Prepare an amortization table allocating payments between interest and principal.
- Describe corporate bonds and explain the tax advantage of debt financing.
- Account for bonds issued at a discount or premium.
- Explain the concept of present value as it relates to bond prices.
- Explain how estimated liabilities, loss contingencies, and commitments are disclosed in financial statements.
- Evaluate the safety of creditors’ claims.
- Understand reporting issues related to leases, postretirement benefits, and deferred taxes (Supplemental Topic: Special Types of Liabilities).