About This Chapter
Current & Long-Term Liabilities in Accounting - Chapter Summary
Employees can review these video lessons on long-term and current liabilities in accounting to build their knowledge of various types of liabilities, such as known, contingent and estimated. Lessons also cover bond financing and issuance and financial ratios. The videos can be viewed online, while the printable lesson transcripts can also be used as handouts for quick reference.
How It Helps
- Makes training simple: This one concise chapter provides you with ample resources to use in training sessions, from new hire onboarding to company-wide workshops and meetings.
- Builds understanding: Our chapter fully outlines the definitions and characteristics of current and long-term liabilities so your employees can develop a thorough understanding of these concepts.
- Provides hands-on knowledge: Your teams will have a chance to use their skills in action by applying what they've learned about debt-related financial ratios.
Once completed, this chapter can help your employees do the following:
- Define current and long-term liabilities
- Outline the different types of known, estimated and contingent liabilities
- Measure annuities and long-term liabilities
- Account for long-term liabilities
- Detail the characteristics and issuing procedures for bonds
- Identify the advantages of bond financing
- Determine a bond's issuance price
- Explain how bonds are issued at a premium or discount
- Discuss how to record the retirement of bonds
- Describe the use of debt-related financial ratios
- Use debt-related financial ratios
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.
13. Practical Application in Accounting: Using Debt-Related Financial Ratios
Debt-related ratios are of paramount importance to virtually all of an organization's stakeholders because they provide a quick, accurate picture of the ability to repay loans. In this scenario, you'll apply what you know about debt ratios to a business situation.
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