Concept introduction:
Liabilities:
Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.
A
A contingent liability is recognized as a liability when it is probable and its reasonable amount can estimate. For example: Amount to be paid the company knows it has lost the case
To choose:
The correct option of
Want to see the full answer?
Check out a sample textbook solutionChapter 8 Solutions
Cornerstones of Financial Accounting - With CengageNow
- Which of the following best describes the classification and normal balance of the accounts receivable account? Select one: a. Asset, Debit b. Liability, credit c. Revenue, credit d. Owner's equity, debitarrow_forwardWill an accounts receivable balance increase with a debit or a credit entry? How do you know?arrow_forwardWhat accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled? A. warranty liability and cash B. warranty expense and cash C. warranty liability and warranty expense, cash D. warranty expense and warranty liabilityarrow_forward
- The journal entry to record the sale of services on credit should include: a debit to Cash and a credit to Accounts Receivable. a debit to Accounts Receivable and a credit to Capital. a debit to Fees Income and a credit to Accounts Receivable. a debit to Accounts Receivable and a credit to Fees Income.arrow_forwardRequirements:a. Prepare adjusting entries to correct accounts receivables.b. Prepare a partial statement of financial position to show the foregoing information.arrow_forwardIdentify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts. Note Receivablearrow_forward
- The adjusting entry to record an NSF check includes a credit to accounts payable a debit to vash a debit to accounts receivable a debit to miscellaneous expensearrow_forwardPrepaid Expense has the account type of Checking with a starting balance ofarrow_forward“Credit card” (with an outstanding balance) would be which type of account? a.Proprietary b.Expense c.Current asset d.Current liability e.Incomearrow_forward
- Which one of the four methods of payments creates an accounts receivable? Select one: a. cash in advance b. open account c. draft d. letter of creditarrow_forwardClassify the accounts as either an asset (A), liability (L), or equity (EQ) account. Note Receivablearrow_forwardWhich item will appear on the credit side of the ledger account? a. Salary b. Drawings c. Service revenue d. Accounts receivablearrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College