An obligation to transfer asset or provide service in future, it is either long term or short term and it covers various aspects. For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc

1. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
A liability is defined as an obligation
to transfer asset or
to provide services in future

2. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
A liability is defined as an obligation
to transfer asset or
to provide services in future
-Liabilities are extremely important as they
are often a significant amount as compared
-to total assets or
-to shareholders’ equity.

3. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
A liability is classified as current if
obligations are due within one year.
All other liabilities are classified as long
term.

4. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
A liability is classified as current if
obligations are due within one year.
Examples of current liabilities
Accounts Payable Sales (other) Tax Payable
Current Portion of Payroll Liabilities
long term debt Accrued Expenses
Unearned Revenues Short Term Notes Payable

5. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
A liability is classified as current if obligations are
due within one year.
All other liabilities are classified as long term.
Examples of long term liabilities
Bonds & Debentures Term Loans
Fixed Deposits Unsecured Loans
Foreign Currency Loans

6. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
Examples of long term liabilities
Bonds & Debentures
Bonds & Debentures holders loan money to a
company for a return in the form of fixed ( contract)
interest.
When market rate of interest is lower than the contract
rate, bonds sell at a premium and vice versa

7. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
Examples of long term liabilities
Bonds & Debentures
Bonds are issued at par or at a premium (or
discount).
The premium (discount) amount represents reduction
(addition) in interest expense.
Bonds can be traded, but market for them in India is not
as developed as for equity.

8. Chapter Eight -- Current & Long Term Liabilities
Chapter Eight Current & Long Term Liabilities
Contingent liabilities
-are potential obligations.
-if they are probable and can be reasonably
estimated , then must be shown in the balance
sheet.
-- otherwise they are indicated by way of a footnote
to the balance sheet