Current Liabilities and Contingencies

A set of vocabulary flashcards based on the lecture notes related to current liabilities and contingencies.

Liability

Present obligation to transfer an economic benefit.

Current Liabilities

Obligations payable within one year from the balance sheet date or within the firm’s operating cycle, whichever is longer.

Accounts Payable

Obligations to suppliers for merchandise or services payable on open account.

Trade Notes Payable

Credit instrument in the form of a written promissory note with a longer duration than accounts payable.

Accrued Expenses

Expenses that have been incurred but not yet paid, often combined and reported under one caption.

Short-Term Notes Payable

Temporary financing from a bank, secured by a promissory note.

Interest Expense

Cost incurred for borrowing money, calculated as a percentage of the face amount of the loan.

Discount on Notes Payable

The difference between the face amount of a note and the amount received when it is issued.

Deferred Subscription Revenue

Liability recorded when cash is received for subscriptions; revenue is recognized over the subscription term.

Gift Cards

Cash received for the sale of gift cards recorded as deferred revenue until redeemed or expired.

Loss Contingency

An existing, uncertain situation involving potential loss dependent on a future event.

Gain Contingency

An uncertain situation that might result in a gain, which is not accrued but disclosed.

Product Warranties

Guarantees provided for products that must be estimated and recorded as liabilities.

Refinancing Short-Term Obligations

Classification of short-term debt as noncurrent if certain conditions of refinancing are met.

Liabilities from Advance Collections

Liabilities created from customer deposits or advances until the product/service is provided.

Contingent Liability

A potential liability that may occur depending on the outcome of a future event.