Liabilities represent the company’s obligations to others, which must be measurable and their occurrence probable (Exhibit 6.18). These obligations stem from a company’s operating activities (accounts payable, unearned revenues, income tax payable, capital leases, etc.) and financing activities (debt).
Exhibit 6.18. Liabilities Typically Consist of (But are Not Always Limited to) :
|Accounts Payable||A company’s obligations to suppliers for services and products already purchased from them, but which have not been paid; represent the company’s unpaid bills to its suppliers for services obtained on credit from them.|
|Notes Payable||Debt or equity securities held by the company|
|Current Portion of Long-Term Debt||Portion of debt with an overall maturity of more than a year; portion due within 12 months|
|Long-Term Debt||The company’s borrowings with a maturity (full repayment) exceeding 12 months|
|Deferred Taxes||Potential future tax obligations arising when taxes payable to the IRS are lower than those recorded on financial statements|
|Minority Interest||Equity interest in the portion of the consolidated businesses that the company does not own|
Current liabilities are expected to be paid within one year. Long-term liabilities are not due within a year. Liabilities are organized in the descending order of maturity, with current liabilities recorded ahead of long-term liabilities.
|Q1:||Which of the items below is not debt?
|Accounts payable ...|