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ACC 205 Week 4 DQ Current Liability

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Accounting

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Current Liability
ACC 205 Week 4 DQ
Current Liability

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Current Liability
Current Liabilities
. What is a “Current Liabilities”?
What is a liability?
Probable future sacrifices of economic benefits arising from present
obligations of an
entity to transfer assets or to provide services to other entities in the
future as a result
of past transactions or events.
FASB Statement of Financial Accounting Concepts No. 6, “Elements of
Financial

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Current Liability
Statements”
Current liabilities are:
Obligations whose liquidation is reasonably expected to require the use
of current
assets or the creation of other current liabilities.
Accounting Research Bulletin No. 43, “Restatement and Revision of
Accounting
Research Bulletins”.
SFAS No.78 indicates that current liabilities should include obligations
that are due on
demand or that will become due on demand within one year from the
balance sheet
date.
2. Typical current liabilities
Accounts payable, Notes payable, Current maturities of long-term debt,
Short-term
obligations expected to be refinanced, Dividends Payable, Returnable
deposits,
Unearned revenues, Sales taxes payable, Income taxes payable,
Employee-related
Liabilities
a. Notes Payables (N/P)
Notes Payables are written promises to pay a certain sum of money on a
specified future date. Notes payable that arise from cash-borrowing
activities are generally of two types: (1) Interest-bearing notes, and (2)
Zero-interest-bearing (=Noninterest-bearing) notes.

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