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Flashcards in Section 13 - Liabilities Deck (17):
1

What is Current Liabilities valued at?

NRV or settlement value

2

What are the two methods to record a liability?

1) Gross method - purchase are shown at gross, if discount is taken, it is considered a reduction to Cost of Sales

2) Net method - purchases are show at net, if discount is not taken, considered interest expense

3

What is an Accrued Liabilities/Expense?

An expense that is incurred but not yet paid in cash.

A current liability.

Example: unpaid salaries or taxes at year end

Expense (I/S)
Accrued Liability (B/S, ie Salaries Payable)

Accrued Liability
Cash

4

What is a Prepaid Expenses?

Expenses paid in cash, but not yet incurred.

Current Asset

Example: Prepaid rent

Prepaid Expense (asset)
Cash

Expense (I/S)
Prepaid Expense

5

What is a Deferred Revenues?

Revenue collected but not yet earned.

Current liability

Example: rent collected or subscriptions collected in advance, gift certificates issued but not yet redeemed

Cash
Unearned Revenue (B/S)

Unearned Revenue (B/S)
Revenue (I/S)

6

What is Revenue Receivable?

Revenue earned but not yet collected.

Current Asset

Example: revenue earned but still due from customer

Receivable
Revenue (I/S)

Cash
Receivable

7

What are the steps to determine the estimated liability for unredeemed coupons?

1) Determine Face Value
2) Add handling fee % promised to merchant
3) Multiply by the % of coupons expected to be redeemed
4) Subtract payments already made to merchants for redeemed coupons.

8

What accounting principles does "Compensated Absences" take into consideration?

Matching

Faithfully Represented (Neutrality)

9

How are Loss Contingencies disclose and accrue?

-Remote - SLIGHT chance of occuring
-Don't disclose
-Don't accrue

-Reasonably Possible - More than Remote, less than Probably
-Do disclose
-Don't accrue

-Probably - LIKELY to occur
-If not estimable
-Do disclose
-Don't accrue
-If estimable
-Do disclose
-Do accrue (conservatism and matching)

10

How are Gain Contingencies disclose and accrue?

Cannot accrue due to conservatism (only accrue if you have $$ in hand)

Remote - no disclose and no accrue
Reasonably possible - yes disclose, no accrue
Probable & estimable - yes disclose, no accrue

11

How are Subsequent Events for Loss/Gain Contingencies disclose and accrue?

Type I - Condition existed at B/S date
-Accrue and disclose

Type II - Condition did not exist at B/S date
-Disclose but not accrue

12

What are Notes Payable recorded at?

Face Value

13

What are long-term payable recorded at?

Present Value

14

What must be present for short-term liability expected to be refinanced to be reported as noncurrent liability (long term)?

Intent and ability

15

Under IFRS, what must exist before an entity's short-term obligations can be classified as long-term?

An AGREEMENT to refinanced into long-term

16

Under IFRS, what is contingency and provision?

Contingency is a potential liability that DOES NOT need to be recognize on the B/S

Provision is a potential liability that DOES need to be recognize on the B/S

17

Under IFRS, are contingent gains required to be disclosed if probable?

YES