Identification of Current Liabilities, Contingencies and Commitments LO3 P 1. Listed below are common types of current liabilities, contingencies, and commitments:
a. Accounts payable
b. Bank loans and commercial paper
c. Notes payable
d. Dividends payable
e. Sales and excise taxes payable
f. Current portion of long-term debt
g. Payroll liabilities
h. Unearned revenues
i. Income taxes payable
j. Property taxes payable
k. Promotional costs
l. Product warranty liability
m. Vacation pay liability
n. Contingent liability
o. Commitment
Required
1. For each of the following statements, identify the category above to which it gives rise or with which it is most closely associated:
1. A company agrees to replace parts of a product if they fail.
2. An employee earns one day off for each month worked.
3. A company signs a contract to lease a building for five years.
4. A company puts discount coupons in the newspaper.
5. A company agrees to pay insurance costs for employees.
6. A portion of a mortgage on a building is due this year.
7. The board of directors declares a dividend.
8. A company has trade payables.
9. A company has a pending lawsuit against it.
10. A company arranges for a line of credit.
11. A company signs a note due in 60 days.
12. A company operates in a state that has a sales tax.
13. A company earns a profit that is taxable.
14. A company owns buildings that are subject to property taxes.
2. Of the items listed from a to o above, which ones would you not expect to see listed on the balance sheet with a dollar amount? Of those items that would be listed on the balance sheet with a dollar amount, which ones would you con- sider to involve the most judgment or discretion on the part of management?