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 type of liability is represented when a company issues a bond as evidence of its debt?

Equity

Contingent liability

Current liability

Long-term liability

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Verified step by step guidance

Step 1: Understand the concept of liabilities in financial accounting. Liabilities are obligations that a company owes to external parties, typically arising from past transactions or events.

Step 2: Differentiate between the types of liabilities. Liabilities are categorized into current liabilities (due within one year), long-term liabilities (due after one year), and contingent liabilities (potential obligations dependent on future events).

Step 3: Recognize the nature of bonds issued by a company. Bonds are a form of debt financing where the company borrows money from investors and agrees to repay the principal amount along with interest over a specified period.

Step 4: Analyze the classification of bonds as liabilities. Since bonds typically have repayment terms extending beyond one year, they are classified as long-term liabilities unless the repayment is due within the next year.

Step 5: Conclude that when a company issues a bond as evidence of its debt, it represents a long-term liability, as the repayment obligation generally extends beyond the current accounting period.