[ACCT 311] - Final Exam Guide - Everything you need to know! (80 pages long)
Document Summary
Liability: obligation that arises from a past transaction that requires an outflow of assets or provisions of services: represents a duty or responsibility, little or no discretion to avoid, transaction of event has already occurred. Example: accounts payable is an obligation that arises when the entity purchases an item using credit and meets the definition of a liability. Accounts receivable does not meet the definition of a liability. Liability has 3 essential characteristics: exists a present time (i. e. at balance sheet date, represents economic burdens or obligations. Will be settled within on operating cycle; or. Will be settled within 12 months; or. Are classified as held for trading; or. Settlement cannot be deferred for at least 12 months. Financial liabilities: contractual obligation to deliver cash or financial assets to another entity or exchange financial assets/liabilities with another entity under conditions that are potentially unfavourable to the entity. Unearned revenue or income taxes payable are examples of non-financial liabilities.
