Ruby Ann Songahid, BSA 2

Answer the following questions.

1. List examples of current liabilities

 Accounts payable
 Accrued expenses
 Cash dividends payable
 Short-term notes payable
 Taxes payable
 Unearned revenues
 Current maturities of long-term debt
 Bank account Overdraft
 Creditors
 Customer deposits
 Interest payable

2. List examples of non-current liabilities

 Debentures
 Long-term loans
 Bonds payable
 Deferred tax liabilities
 Long-term lease obligations
 Pension benefit obligations
 Deferred compensation
 Deferred revenue
 Certain health care liabilities

3. Differentiate deferred revenue vs. unearned revenue

Deferred Revenue
 Deferred revenue is a liability on a company's balance sheet that represents a
prepayment by its customers for goods or services that have yet to be delivered.
 Deferred revenue is recognized as earned revenue on the income statement as the
good or service is delivered to the customer.
 The use of the deferred revenue account follows GAAP guidelines for accounting
conservatism.
 If the good or service is not delivered as planned, the company may owe the
money back to its customer.

Unearned Revenue
 Unearned revenue is money received by an individual or company for a service or
product that has yet to be provided or delivered.
 It is recorded on a company’s balance sheet as a liability because it represents a
debt owed to the customer.
 Once the product or service is delivered, unearned revenue becomes revenue on
the income statement.
 Receiving funds early is beneficial to a company as it increases its cash flow that
can be used for a variety of business functions.
4. Measurement of current liabilities
 Measured at face value
 No present value adjustments
e.g.
Accounts Payable

5. Measurement of non-current liabilities

 Measured at the present value

 Discounted by rate of interest
e.g.
Bonds payable

6. Presentation of current liabilities

 Current liabilities and their account balances as of the date on the balance sheet
are presented first on the balance sheet, in order by due date. The balances in
these accounts are typically due in the current accounting period or within one
year.
 Usually reported at their full maturity value.
 Difference between present value and the maturity value is considered
immaterial.

7. Refundable deposits

- means any deposits of cash received by any Company provided that such

deposits are not booked as accounts receivable or as revenue by any Company
and are subject to refund to the depositor.

-(e.g., room security deposit or damage deposit) are collected from individuals

by departments and are expected to be refunded at a future date.