lit@7BiwenEw.mu.

n →
." * me accountants

HAVE To USE THEIR OWN JUDGMENT OF

SITUATIONS to
ESTIMATE FUTURE OUTCOMES .

MEANS THAT WE ARE GOING to GIVE UP

SOMETHING IN THE FUTURE .

AND WHAT ?

← Which RELATES to THE THINGS that HAVE

-

VALUE .
such As Assets AND services .

-
it DOESN'T ONLY MEAN MSM .

LIABILITIES ARE THE PRESENT

OBLIGATIONS RESULTING FROM ,

THE

PAST TRANSACTIONS OR EVENTS .

SO IN ORDER to recognize a

liability ,
THE TRANSACTION OR EVENT

THAT
TRANSFERRING
commit is NG US TO

ASSETS
PROVIDING OR services
MUST WAVE HAPPENED ALREADY !
-

LIABILITIES ARE A SOURSE of third PARTY FUNDING

THAT A BUSINESS USES TO BUY ASSETS AND FUND OPERATIONS .

SO BUSINESSES HAVE two options to choose sources

FROM -
LIABILITIES or EQUITY .
 IN A BALANCE SHEET LIABILITIES ARE ARRANGE IN ORDER OF

LIAB TOP it
THEIR DUEDAtE .
SHORT TERM . At THE OF
,

AND THE ANGER TERM U' AB FURTHER

.
DOWN .

CURRENT LIABILITIES
ARE THE BUSINESSES OBLIGATIONS THAT Should BE SETTLED

within ONE YEAR FROM NOW .

-
ACCOUNTS PAYABLE -
RELATE to THE Bills or invoices

THAT WE GET SENT WHEN BUYING SOMETHING FROM THE

-

SUPPLIER ON CREDIT ( ON AN ACCOUNT) .

.

MEANS THAT YOU AGRA TO PAY LATER

TIM TO PAY is WRITTEN IN

THE INVOICE . USUALLY 30 DAYS

←
FROM AN ACCOUNTANT POV
CAT) (At) WHEN
( Lt) THE BUYER Receives THE
BUYER (L Tl SELLER
INVOICE FRAM THE SUPPLIER
,

THEY RECOGNIZE AN ACCOUNTS PAYABLE BALANCE FOR THE

AMOUNT OWE AND ON THE OTHER SIDE THE SELLER

THAT THEY .

AND OPPOSITE ACCOUNTS RECEIVABLE BALANCE

RECOGNIZES AN EQUAL

FOR THE SAME AMOUNT .

SALARIES PAYABLE -
usually HAPPEN AT THE END

OF THE MONTH . SO WHEN THE BOOKS

ARE PREPARED AT THE END OF THE MONTH -

WE NEED TO RECOGNISE

A BALANCE FOR
SMARiESPAyABE .
 -

TAXES PAYABLE
- INT ERES PAYABLE
-
ACCRUALS ( ACCRUED EXPENSES) -
ARE ADJUSTING

JOURNAL ENTRIES . TYPICCALVY POSTED BY ACCOUNTANTS

AT THE END OF THE MONTH TO RECOGNIZE EXPENSES
THAT HAVE BEEN INCURRED ( Ftd All MOHECEMH ) ,
BUT RAVEN 'T

BEEN RECOGNIZED YET IN THE BOOKS .

FOR EXAMPLE SERVICE HAVE BEEN

A PROVIDED But invoice HASN'T
RELIVED YET .
i. E .
PLUMBER CAME
SEWER SIDE
IN THE END OF THE MONTH
Ab ,
AT
SO NEED TO INCLUDE his
LT Lp
BUYER
SERVICES in this MONTH .

UNEARNED REVENUE -

is THE OPPOSITE TO PREPAYMENT

FOR GOOD SERVICE
Ali MES UP WHEN
SMEONEP A OR

IN ADVANCE IT MIGHT SOUND LIKE AN ASSET BUT BECAUSE

.
,
-

OF THE DOUBLE ENTRY BOOKKEEPING , THERE is NO TRANSACTION .

SO it is AN OBLIGATION to YOU TO TRANSFER ASSETS OR PROVIDE

services IN THE FUTURE .

SHORT-TERM LOANS
 NON CURRENT LIABILITIES
-

ARE OBLIGATIONS WHICH AREN'T EXPECTED TO BE SETTLED

within A YEAR .

-
LONG TERM LOANS
-
-
FROM A BANK OR ANOTHER FINANCIAL

institution who IN RETURN will EXPECT TO BE REPAID with

,

INTEREST .

BONDS -

SIMILAR TO LOANS .
BUT THE MONEY is RAISED Directly

FROM PUBLIC .
BONDS ARE LESS FLEXIBLE .

MORTGAGES
-

EMPLOYEE PENSIONS

DEFERRED INCOME TAX

CON TINGED LIABILITIES

( ych0BHldE 0593 ATENOCTBA)

is A POTENTIAL OBLIGATION MAY NRRISE DEPENDING ON THE

OUTCOME OF AN UNCERTAIN FUTURE EVENT .

FOR EXAMPLE A CUSTOMER

BROKE his ARM in your

RESTAURANT WHEN SLIPPED

ON ME WET FLOOR AND THERE

WERE NO SIGN .