Unearned revenues from magazine subscriptions often cover more than one accounting period. A portion of the earned revenue is recognized each period and the unearned revenue account is reduced.
Notes payable often extend over more than one accounting period. A three-year note payable would be classified as a current liability for one year and a long-term liability for two years.
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Financial AccountingJohn J. WildSeventh Edition Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 9Reporting and Analyzing Current LiabilitiesPastPresentFutureDefining LiabilitiesBecause of apast event . . .Thecompanyhas a presentobligation. . . For futuresacrificesC19-*Expected to be paid within one year or the company’s operating cycle, whichever is longerClassifying LiabilitiesCurrent LiabilitiesExpected not to be paid within one year or the company’s operating cycle, whichever is longerLong-Term LiabilitiesC19-*Uncertainty in LiabilitiesUncertainty in whom to payUncertainty in when to payUncertainty in how much to payC19-*Accounts PayableSales Taxes PayableUnearned RevenuesShort-Term Notes PayableKnown LiabilitiesPayroll LiabilitiesMulti-Period Known LiabilitiesC29-* Employers also incur expenses and liabilities from having employees.Payroll LiabilitiesP29-*Employees have amounts withheld from their paychecks based on their earnings.Employee Payroll DeductionsSocial Security TaxesMedicare TaxesFederal Income TaxState and Local Income TaxesVoluntary DeductionsGross PayNet PayP29-*Social Security TaxesMedicare TaxesFederal and State Unemployment TaxesEmployers pay amounts equal to that withheld from the employee’s gross pay.Employer Payroll TaxesP39-*Multi-Period Known LiabilitiesOften include unearned revenues and notes payable.Unearned revenues from magazine subscriptions often cover more than one accounting period. A portion of the earned revenue is recognized each period and the unearned revenue account is reduced.Notes payable often extend over more than one accounting period. A three-year note payable would be classified as a current liability for one year and a long-term liability for two years.C39-* An estimated liability is a known obligation of an uncertain amount, but one that can be reasonably estimated.Estimated LiabilitiesP49-*Employer expenses for pensions or medical, dental, life, and disability insuranceEstimated Liabilities:Health and Pension BenefitsAssume an employer agrees to pay an amount for medical insurance equal to $8,000, and contribute an additional 10% of the employees’ $120,000 gross salary to a retirement program.P49-*Review of Accounting for Contingent Liabilities9-*C3End of Chapter 99-*