Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following is NOT a liability that must be estimated?

Accounts Payable

Contingent Liability

Pension Obligation

Warranty Liability

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Verified step by step guidance

Understand the concept of liabilities: A liability is an obligation that a company owes to external parties, typically arising from past transactions or events. Some liabilities require estimation because their exact amounts are not known at the time of recording.

Review the types of liabilities listed in the problem: Accounts Payable, Contingent Liability, Pension Obligation, and Warranty Liability. Determine which of these requires estimation and which does not.

Analyze Accounts Payable: Accounts Payable represents amounts owed to suppliers for goods or services received. These amounts are typically known and do not require estimation, as they are based on invoices or agreed-upon terms.

Examine Contingent Liability, Pension Obligation, and Warranty Liability: These liabilities often require estimation because their exact amounts depend on future events, actuarial calculations, or usage patterns. For example, Warranty Liability depends on the likelihood of product defects and repair costs.

Conclude that Accounts Payable is NOT a liability that must be estimated, as its amount is definite and based on existing invoices or agreements, unlike the other liabilities listed.