Payables and Accrued Liabilities

Payables and Accrued Liabilities

1. Definition of Liability

   • 1. Probable Future Sacrifice
   • 2. To transfer assets or provide services
   • 3. Result of a past transaction

2. Types of Liabilities

   • Operating Liabilities
     • Accounts payable, accrued liabilities, unearned revenue, income taxes payable, dividends payable, warranty obligations
       • Current Liability: a liability to be extinguished with CA, or through the incurrence of other CL, within one year of the B/S date or operating cycle, whichever is longer
   • Financing Liabilities
     • Notes Payable, Bonds Payable
   • Special Liabilities
     • Contingencies, off-balance sheet liabilities and commitments
       • Contingent liabilities do not definitely exist - their existence is dependent on a future event. They can be recognized on the F/S depending on probability of occurrence and ability to estimate