1. From the list of accounts below, indicate whether each one is a) an estimated liability,...
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1. From the list of accounts below, indicate whether each one is a) an estimated liability, b) a contingent liability, or c) an ordinary current liability. (5 marks) Warranty on $1,795,272 worth of canoes Unearned revenues Bank overdraft Accounts payable - VUR Company Gift card liability Income taxes payable Interest payable Lawsuit against the company Debt guarantees Union dues payable 1. From the list of accounts below, indicate whether each one is a) an estimated liability, b) a contingent liability, or c) an ordinary current liability. (5 marks) Warranty on $1,795,272 worth of canoes Unearned revenues Bank overdraft Accounts payable - VUR Company Gift card liability Income taxes payable Interest payable Lawsuit against the company Debt guarantees Union dues payable
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Answer rating: 100% (QA)
Heres an explanation of each account and its classification Warranty on 1795272 worth of canoes a Estimated Liability This is an estimated liability because it represents the expected cost of honoring warranties on canoes sold The company estimates the cost it will incur to repair or replace defective canoes in the future Unearned revenues c Ordinary Current Liability Unearned revenues represent payments received in advance for goods or services that the company has not yet provided These are considered ordinary current liabilities as they will be recognized as revenue once the company fulfills its obligations Bank overdraft c Ordinary Current Liability A bank overdraft occurs when a companys bank account balance goes below zero due to withdrawing more funds than are available It is treated as an ordinary current liability as it represents the amount the company owes to the bank Accounts payable VUR Company c Ordinary Current Liability Accounts payable is a standard current liability representing amounts owed to suppliers for goods or services received The addition of VUR Company indicates the specific creditor Gift card liability b ... View the full answer
Related Book For
College Accounting A Contemporary Approach
ISBN: 978-0077639730
3rd edition
Authors: David Haddock, John Price, Michael Farina
Posted Date:
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