About This Chapter
Current and Long-Term Liabilities in Accounting - Chapter Summary and Learning Objectives
Accounting methods for different types of liabilities are covered in this chapter. You'll examine known and contingent liabilities and learn how to account for estimated liabilities. The skilled instructors who lead these lessons will teach you about various types of bonds and methods for issuing and retiring them. When you've watched all the lessons in this chapter, you'll know about:
- Characteristics of current and long-term liabilities
- Types of estimated liabilities
- Long-term liability measurements
- Bond issuance price determination
- Accounting methods for bonds issued at a discount
- Debt-related financial ratios
|Current & Long-Term Liabilities: Definition & Characteristics||Defines a liability and differentiates between current and long-term types. Introduces characteristics of each.|
|Known Liabilities: Definition & Examples||Examines current known liabilities, such as accounts payable, sales tax payable, short-term notes, payroll liabilities and multi-period liabilities.|
|How to Account for Estimated Liabilities||Defines estimated liabilities. Illustrates accounting methods for pensions, health care, vacation pay and other employee benefits. Discusses multi-period estimated liabilities.|
|Contingent Liabilities: Definition & Examples||Gives a definition for and provides examples of contingent liabilities. Details the accounting method for these liabilities.|
|Measuring Long-Term Liabilities||Demonstrates how to use present value and future value to measure long-term liabilities. Explains how to compute the present value of an annuity.|
|Accounting for Long-Term Liabilities||Details the accounting process for long-term liabilities. Examines interest-bearing notes and mortgages payable.|
|Bonds: Types, Characteristics and Issuing Procedures||Identifies the different types of bonds and lists some of their characteristics. Highlights the procedures for issuing bonds.|
|The Advantages of Bond Financing||Discusses par of value of a bond and face amount/value. Shows you how to account for bonds payable issued at face value.|
|Determining a Bond's Issuance Price||Describes the process used to determine a bond's issuance price. Explains how to prepare recording entries for bond issuance and bond interest expense.|
|Issuing Bonds at a Discount or a Premium||Demonstrates the accounting methods for bonds issued at a discount and at a premium. Teaches you how to compute and record amortization of a bond premium and bond discounts. Introduces the straight-line method.|
|How to Record the Retirement of Bonds||Examines how bonds are retired before maturity. Details methods for recording the retirement of bonds.|
|Using Debt-Related Financial Ratios||Illustrates how to use debt-related financial ratios to determine the degree of a company's leverage and its ability to repay loans. Discusses debt ratio, debt-to-equity ratio and interest-earned ratio.|
1. Current & Long-Term Liabilities: Definition & Characteristics
In this lesson, we'll define 'liabilities.' You'll also learn the difference between current and long-term liability. Finally, we'll discuss on which financial statement you'll find liabilities and provide examples of each type.
2. Known Liabilities: Definition & Types
In this lesson, you'll learn about known liabilities. We'll discuss three types of known liabilities: liabilities by agreement, liabilities by contract, and liabilities by law. You'll also learn which financial statement these liabilities are listed on.
3. Estimated Liabilities: Definition & Types
In this lesson, you'll learn about estimated liabilities. We'll discuss three types of estimated liabilities: retirement, warranties and property taxes. We'll also explore suggestions on how to estimate the amount owed.
4. Contingent Liabilities: Definition & Examples
In this lesson, you'll learn about three types of contingent liabilities: product recalls, pending lawsuits, and changes in legislation. You'll also learn how to account for these types of liabilities on the financial statements.
5. Measuring Long-Term Liabilities & Annuities
In this lesson, we'll define long-term liabilities and annuities. We'll provide an example of a long-term liability annuity and discuss how it's measured.
6. Accounting for Long-Term Liabilities
In this lesson, we'll define long-term liabilities and discuss four examples: bonds, pensions, long-term leases and mortgages. You'll also learn how to account for these types of long-term liabilities.
7. Bonds: Types, Characteristics and Issuing Procedures
In this lesson, you will learn about some of the more common types of bonds and their characteristics. Bonds include: secured and unsecured bonds, term and serial bonds, registered and bearer bonds, and convertible and callable bonds.
8. The Advantages of Bond Financing
This lesson introduces you to the basics of bond financing, important vocabulary related to bond financing, and the financial advantages to the bond issuer. You will learn why bond issuances are a great way for companies to fund large projects.
9. Determining a Bond's Issuance Price
In this lesson, we'll discuss factors that affect a bond's issue price: demand, risk, and market conditions. You'll also discover whether these factors increase or decrease bond prices.
10. Issuing Bonds at a Discount or a Premium
In this lesson, we'll define a bond and discuss how bonds are issued at a premium and discount. You'll also learn the advantages and disadvantages of each.
11. How to Record the Retirement of Bonds
In this lesson, we'll define bonds and discuss their components and the callable feature. You'll also learn how to record a retired bond at maturity and see the difference in recording a gain or loss.
12. Using Debt-Related Financial Ratios
In this lesson, you'll learn about two types of ratios: debt and debt service coverage. We'll also discuss which financial statements you'll use to find the data and how to analyze the results.
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Other chapters within the Accounting 101: Financial Accounting course
- Introduction to Accounting
- Financial Statements in Accounting
- Mechanics of the Accounting Cycle
- Adjusting Accounts and Preparing Financial Statements
- Internal Controls in Accounting
- Merchandising Operations and Inventory in Accounting
- Receivables in Accounting
- Completing the Operating Cycle in Accounting
- Long-Term Assets in Accounting
- Reporting & Analyzing Equity in Accounting
- Statement of Cash Flows in Accounting
- Financial Statement Analysis in Accounting
- Studying for Accounting 101