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- is a legally binding obligation payable

to another entity
- amounts owed to creditors for a past
transaction
- usually have the word " " in their account title
- are incurred in order to fund the ongoing activities of a
business.
-Classification-

 Current Liability is one which the entity expects to pay off within
one year from the reporting date.
 Non-Current Liability is one which the entity expects to settle
after one year from the reporting date.
- amount to be paid for goods and
services on account

Transaction.
Toto Lee’s law firm bought P20,000 of office supplies on credit.

- is a current obligation made in writing to


pay a specific amount within one year or
the current accounting period.

Transaction.
Elijah’s Melody is a musical retailer that purchases band and orchestral
instruments to rent to high school students each year. Before the big rental
season, Elijah contacts his vendors and arranges a one-year loan for the new
instruments. Elijah purchases P150,000 of band instruments and signs a one-
year note that includes 5% interest.
- is a current liability account that contains the
amounts of any salaries owed to employees,
which have not yet been paid to them.
- money you owe to your employees for services
performed.

Transaction.
Mr. Cruz had an unpaid salaries of his employees in Cruz company of P 300, 000

- current liability account that reports the


amounts owed to employees for hours worked
but not yet paid as of the date of the balance
sheet

Transaction.
Mrs. Sy pay her employees every Friday and December 31 lands on a
Tuesday. She owes the employees two days worth of pay for the Monday and
Tuesday worked in December.
- is a liability that an entity incurs that is
based on its reported level of
profitability. The tax can be payable to a
variety of governments, such as the
federal and state governments within
which the entity resides.
Transaction.
ABC International owes the federal government 35% of before-tax profits
worth Php 350,000

- PINES

Transaction.
- CHRISTINE - Is a contribution table would be
the basis of all premiums that a
philhealth member would pay
for this year. It covers the
employed, self-employed, OFW,
sponsored and individually
paying members of philhealth

Transaction. Transaction.
Mr. Balba loaned php1200 from
philhealth and he's loan term is only 6
months.
- Home Development Mutual Fund is a
national savings program and affordable
shelter financing for Filipinos employees
offers its members short-term loans and
access to housing programs.

Transaction.
For this month, December 2020, Mrs. Sison had an unpaid contribution in
her Pag-ibig fund.

- is a liability that include various types of


non-wage compensation provided to
employees in addition to their normal
wages or salaries

Transaction.
Ching Chong Wa company had an unpaid benefits Php58,000 to its
workers for unused sick leave and vacation leave
- is interest owed to lenders that has not been paid

Transaction.
December 1 Jack borrowed Php.100,000 with interest rate of 10% (Php.10,000)

Nadine agrees to pay the principal and 5 months of interest when the note comes
due on April 30.

- A liability account that reports amounts received in


advance of providing services. When the services are
provided, this account balance is decreased and a revenue
account is increased.
Transaction.
Company X asked for a deposit of $69 on January 2 in exchange of their house
cleaning services on January 3
- refers to an agreement of a company enters into with
another party, which includes a formal written promise to pay
pre-determined amounts on a specific date

Transaction.
Mr. Bills obtained a three year loan from a bank.