CURRENT LIABILITIES, CONTINGENCIES, AND COMMITMENTS
After studying this chapter, you should be able to:
- Describe the recognition criteria and valuation methods for liabilities.
- Explain why accounts payable are sometimes thought of as “free debt.”
- Understand the issues in accounting for a company's payroll.
- Explain warranty obligations and how they are accounted for.
- Explain unearned revenues and describe situations where they must be recorded.
- Describe the nature of non-financial liabilities and provisions.
- Understand the concept of constructive obligations.
- Explain why companies use working capital loans and lines of credit.
- Calculate the amount of interest owed on various types of short-term notes payable.
- Explain why any portion of long-term debt that is due within a year is classified as a current liability.
- Calculate the accounts payable turnover rate and average payment period.
- Explain contingencies and how they are accounted for.
- Explain what commitments are and how they are handled.
Good Payroll Systems Help Keep Employees Happy
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