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

In the context of accounting for liabilities, an allocation base is:

A financial instrument used to raise long-term capital

A type of current liability that must be paid within one year

A method for estimating uncollectible accounts

A measure used to assign the cost of a liability over time

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Verified step by step guidance

Understand the concept of an allocation base: In accounting, an allocation base is a measure used to assign costs systematically over time. It is often tied to the usage or benefit derived from a liability or asset.

Recognize the context of liabilities: Liabilities represent obligations that a company owes to external parties, and the allocation base helps distribute the cost of these liabilities over the relevant period.

Differentiate allocation base from other terms: It is not a financial instrument, a current liability, or a method for estimating uncollectible accounts. Instead, it is a tool for cost allocation.

Relate the allocation base to accounting principles: The allocation base ensures that costs are matched with the periods in which the related benefits are realized, adhering to the matching principle in accounting.

Apply the concept: When dealing with liabilities, identify the appropriate allocation base (e.g., time, usage, or production) to assign costs accurately over the liability's life.