Summary: Liabilities

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 PayableA 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 PayableDebt or equity securities held by the company
Current Portion of Long-Term DebtPortion of debt with an overall maturity of more than a year; portion due within 12 months
Long-Term DebtThe company’s borrowings with a maturity (full repayment) exceeding 12 months
Deferred TaxesPotential future tax obligations arising when taxes payable to the IRS are lower than those recorded on financial statements
Minority InterestEquity 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.

16. Debt
Q1:Which of the items below is not debt?
Notes payable
Long-term debt
Accounts payable ...

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