Amounts owed for rent, insurance, utilities, inventory purchases, and the like usually fall into this category. However, the one-year standard presented in this textbook is sufficient in a vast majority of cases. It refers to any liability that will require the use of a current asset or the creation of another current liability. In upper-level accounting courses, the definition of a current liability is refined a bit. A debt that is expected to be satisfied within one year from the date of the balance sheet is classified as a current liability. The distinction between current and noncurrent liabilities Debts that will not be satisfied within one year from the date of a balance sheet. Some reported liabilities are for definite amounts, although a number are no more than estimations. Liabilities normally require the payment of cash but may at times be settled by the conveyance of other assets or the delivery of services. When creating a balance sheet, what is reported as a liability? Why are some liabilities shown as current whereas others are not? How does an accountant draw a distinction between liabilities that are labeled as current and those that are reported as noncurrent (sometimes referred to as long-term liabilities)?Īnswer: A liability is an obligation owed to a party outside the reporting organization-a debt that can be stated in monetary terms. were divided into several specific categories: That seems to be a rather large figure, especially for an organization holding only $3.3 billion in cash and cash equivalents.įor reporting purposes, the current liabilities Debts that will be satisfied within one year from the date of a balance sheet. of over $71 billion, including current liabilities of approximately $31 billion. Question: The June 30, 2009, consolidated balance sheet for The Procter & Gamble Company and its subsidiaries reports total liabilities Future sacrifices of economic benefits arising from present obligations the debts of an organization.
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