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Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
Current & Long Term Liabilities
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Current & Long Term Liabilities

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A liability is defined as an obligation to transfer assets or to provide services in the future. Current and long term liabilities form a significant process. “Financial Accounting” , an integral part …

A liability is defined as an obligation to transfer assets or to provide services in the future. Current and long term liabilities form a significant process. “Financial Accounting” , an integral part of Accounting is brought to you by Welingkar’s Hybrid Distance Learning Program.

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  • 1. Welingkar’s Distance Learning Division Financial Accounting CHAPTER-8. Current & Long Term Liabilities We Learn – A Continuous Learning Forum
  • 2. Chapter Eight - Current & Long Term Liabilities A liability is defined as an obligation to transfer asset or to provide services in future
  • 3. Chapter Eight - Current & Long Term Liabilities A liability is defined as an obligation to transfer asset or to provide services in future -Liabilities are extremely important as they are often a significant amount as compared -to total assets or -to shareholders’ equity.
  • 4. Chapter Eight - Current & Long Term Liabilities A liability is classified as current if obligations are due within one year. All other liabilities are classified as long term.
  • 5. Chapter Eight - Current & Long Term Liabilities A liability is classified as current if obligations are due within one year. Examples of current liabilities Accounts Payable Sales (other) Tax Payable Current Portion of Payroll Liabilities long term debt Accrued Expenses Unearned Revenues Short Term Notes Payable
  • 6. Chapter Eight - Current & Long Term Liabilities A liability is classified as current if obligations are due within one year. All other liabilities are classified as long term. Examples of long term liabilities Bonds & Debentures Term Loans Fixed Deposits Unsecured Loans Foreign Currency Loans
  • 7. Chapter Eight - Current & Long Term Liabilities Examples of long term liabilities Bonds & Debentures Bonds & Debentures holders loan money to a company for a return in the form of fixed ( contract) interest. When market rate of interest is lower than the contract rate, bonds sell at a premium and vice versa
  • 8. Chapter Eight - Current & Long Term Liabilities Examples of long term liabilities Bonds & Debentures Bonds are issued at par or at a premium (or discount). The premium (discount) amount represents reduction (addition) in interest expense. Bonds can be traded, but market for them in India is not as developed as for equity.
  • 9. Chapter Eight - Current & Long Term Liabilities Contingent liabilities -are potential obligations. -if they are probable and can be reasonably estimated , then must be shown in the balance sheet. -- otherwise they are indicated by way of a footnote to the balance sheet

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