Liability is the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding economic benefits in the future.
Like the assets, liabilities also have two types: Current liabilities and noncurrent liabilities.
Current Liability is all the liabilities of the business that are to be settled in cash within the fiscal year or the operating cycle of a given firm, whichever period is longer.
Noncurrent liability is liabilities that are due beyond a year or the normal operation period of the Company.
*Normal operation period is the amount of time it takes for a Company to turn inventory into a cash.
Liabilities is also a 'Real account'. It does not also close at the end of the accounting period.
Usually, kapag liability account, laging may 'payable' sa account name. For example, accounts payable, loans payable, notes payable and so on. But not all.
Case 1
Si Kathryn ay owner ng restaurant. Bumili siya ng generator set para if ever na walang kuryente, tuloy pa rin ang operation niya. Ang cost ng generator set is 50,000 php. Since wala siyang sapat na on hand na pera, nag loan siya sa bank amounting to 50,000.00 php at ang term ay dapat mabayadan in one year.
-Since one year ang term ng utang ni Kathryn, classified ang utang niya as Current Liability. Pero, saan niya ika-classify ang generator set? Tama ba ako kung sasabihin kong isa itong asset or ari-arian sa tagalog? The answer is yes, asset ang generator set. Pero, anong klaseng asset ba ito? Current Asset? Or noncurrent Asset? Since hindi mo naman magagamit ang generator set ng one year lang, classified siya as noncurrent asset.
Case 2
Si Daniel ay real estate business owner. May ari siya ng mahigit 50 condominiums sa buong Pilipinas. May isa siyang ahente na naka benta ng isang unit ng condo. Ang halaga ng isang unit ay 1.3 million php. Nag down ang client ng 300,000.00 php at nangangahulugang may balance pa ito na isang milyon. Sa balance na isang milyon, napagkasunduan nila na babayaran ito ng kliyente sa loob ng tatlong taon kasama pati ang interes nito.
-Para kay Daniel, ano ang tawag sa isang milyon na balance ng kliyente? Asset o Liability? The answer is, isa itong asset(receivable). Pero saan mo ito ika-classify? Current or noncurrent? Hindi siya masisingil sa loob ng twelve months or one year dahil tatlong taon ang kontrata. Nangangahulugan ba nito na noncurrent asset ito? The answer is no. Bakit? Pasok kasi ito sa 'within the normal operating cycle'. Line of business talag ni Daniel ang magtinda ng condo units and realated ang transaction sa kliyente that's classified ito as current asset.
...END OF THIS CHAPTER...
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Introdution to Accounting
RandomCalling the attention of all aspirant soon to be CPA'S and any other related courses to stop by and read this book. This is a taglish book for better understanding of explanations. Read in order to learn. Listen in order to understand. So what ar...
