INTERMEDIATE ACCOUNTING II - CHAPTER 13
(CURRENT LIABILITIES AND CONTINGENCIES)
QUESTIONS AND ANSWERS UPDATED 2024- 2025
liabilities,,ANS,-
,,probable,future,sacrifices,of,economic,benefits,arising,from,present,obligations,of,a,particular,entity,to,tr
ansfer,assets,or,provide,services,to,other,entities,in,the,future,as,a,result,of,past,transactions,or,events
three,essential,characteristics,of,liabilities,,ANS,-
,,1.,it,is,a,present,obligation,that,entails,settlement,by,probable,future,transfer,or,use,of,cash,,goods,,or,se
rvices
2.,it,is,an,unavoidable,obligation
3.,the,transaction,or,other,event,creating,the,obligation,has,already,occurred
current,liabilities,,ANS,-
,,obligations,whose,liquidation,is,reasonably,expected,to,require,use,of,existing,resources,properly,classifi
ed,as,current,assets,,or,the,creation,of,other,current,liabilities,(recognizes,operating,cycles,of,varying,leng
ths)
operating,cycle,,ANS,-
,,the,period,of,time,elapsing,between,the,acquisition,of,goods,and,services,involved,in,the,manufacturing,
process,and,the,final,cash,realization,resulting,from,sales,and,subsequent,collections
Discount,on,Notes,Payable,,ANS,-,,a,contra-
account,to,Notes,Payable,that,represents,interest,expense,chargeable,to,future,periods;,used,with,zero-
interest,bearing,notes,(charged,as,Interest,Expense,over,the,life,of,the,note)
cash,dividend,payable,,ANS,-
,,an,amount,owed,by,a,corporation,to,its,stockholders,as,a,result,of,its,board,of,directors',authorization
preferred,dividends,,ANS,-
,,not,shown,as,a,liability,because,they,aren't,an,obligation,until,the,board,of,directors,authorizes,the,paym
ent,(companies,should,disclose,the,amount,of,cumulative,dividends,unpaid,in,a,note,or,show,it,parentheti
cally,in,the,capital,stock,section)