With the discussion of investments in Chapter 12, we concluded our six-chapter coverage of assets that began in Chapter 7. This is the first of six chapters devoted to liabilities. Here we focus on short-term liabilities. Bonds and long-term notes are discussed in Chapter 14. Obligations relating to leases, income taxes, pensions, and other postretirement benefits are the subjects of the following four chapters. In Part A of this chapter, we discuss liabilities that are classified appropriately as current. In Part B we turn our attention to situations in which there is uncertainty as to whether an obligation really exists. These are designated as loss contingencies.
Define liabilities and distinguish between current and long-term liabilities.
Account for the issuance and payment of various forms of notes and record the interest on the notes.
Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded.
Determine when a liability can be classified as a noncurrent obligation.
Identify situations that constitute contingencies and the circumstances under which they should be accrued.
Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments.
