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?

Pension Obligation

Warranty Liability

Contingent Liability

Accounts Payable

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Verified step by step guidance

Understand the concept of liabilities: Liabilities are obligations that a company owes to external parties, and they can be classified as either current or long-term. Some liabilities require estimation because their exact amounts are not known at the time of recording.

Review the types of liabilities mentioned: Pension Obligation, Warranty Liability, Contingent Liability, and Accounts Payable. Determine which of these require estimation and which do not.

Analyze Pension Obligation: Pension obligations are liabilities related to employee retirement benefits. These often require estimation based on actuarial assumptions, such as employee life expectancy and future salary increases.

Analyze Warranty Liability: Warranty liabilities arise when a company offers warranties on its products. The company must estimate the cost of future repairs or replacements based on historical data and expected warranty claims.

Analyze Accounts Payable: Accounts Payable represents amounts owed to suppliers for goods or services received. This liability does not require estimation because the amounts are known and documented through invoices.