Financial Accounting Course Review for Accounting Students

Financial Accounting Course

U.S. GAAP Codification

IFRS International Standards

Accounting Topics

Liability Accounts 01
Examples and Practice Questions

U.S. GAAP Codification, Accounting Textbooks

Financial Accounting, Intermediate Accounting, Advanced Accounting

U.S. GAAP by Topic, Accounting by Topic

Liabilities

1. Liabilities are present obligations to transfer resources in the future

2. Such obligations are due to past transactions or events

3. Past, present and future
(1) due to past transactions or events
(2) present obligations
(3) future transfer of resources

Debits and credits

1. Liability accounts have normal balances on the credit side

2. Increases in liability accounts are recorded on the credit side
3. Decreases in liability accounts are recorded on the debit side

Classification of liabilities

1. Liabilities are classified as current and noncurrent liabilities

2. Current liabilities are expected to require the transfer of resources
--> within a year or normal operating cycle whichever is longer
--> Codification link to current liabilities

3. Current liabilities include the following
(1) Accounts payable
(2) Notes payable, due within a year
(3) Short-term borrowings
(4) Income taxes payable

4. Noncurrent liabilities are expected to require the transfer of resources
--> after a year or normal operating cycle whichever is longer

5. Noncurrent liabilities include the following
(1) Notes payable, due after a year
(2) Long-term borrowings
(3) Bonds payable
(4) Capital lease obligations

Practice Questions

Entity A has the following account balances as of December 31, 2010.

	Accounts	Balances
1	Accounts payable due within a year	$50,000
2	Notes payable due in 2011	$70,000
3	Notes payable due in 2012	$40,000
4	Accounts receivable due within a year	$10,000
5	Notes receivable due in 2012	$10,000
6	Bonds payable due in 2015	$80,000
7	Income taxes payable	$30,000
8	Short-term borrowings	$20,000

1. What is the amount of current liabilities?

	Accounts	Balances
1	Accounts payable due within a year	$50,000
2	Notes payable due in 2011	$70,000
7	Income taxes payable	$30,000
8	Short-term borrowings	$20,000
	Total current liabilities	$170,000

2. What is the amount of noncurrent liabilities?

	Accounts	Balances
3	Notes payable due in 2012	$40,000
6	Bonds payable due in 2015	$80,000
	Total noncurrent liabilities	$120,000

(Note) The following items are not liabilities

	Accounts	Balances
4	Accounts receivable due within a year	$10,000
5	Notes receivable due in 2012	$10,000

Examples of current liabilities

	Accounts payable, due within a year
	Notes payable, due within a year

	Salaries payable
	Rent payable
	Insurance payable
	Interest payable
	Income taxes payable
	Dividends payable

	Unearned rent revenue

	Short-term borrowings

Examples of noncurrent liabilities

	Notes payable, due after a year

	Long-term borrowings

	Bonds payable
	Capital lease obligations

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Codification Topics at the 100 Level

Topic 105: Generally Accepted Accounting Principles

Codification Topics at the 200 Level

Topic 205: Presentation of Financial Statements

Topic 210: Balance Sheet

Topic 215: Statement of Shareholder Equity

Topic 220: Comprehensive Income

Topic 225: Income Statement

Topic 230: Statement of Cash Flows

Topic 235: Notes to Financial Statements

Topic 250: Accounting Changes and Error Corrections

Topic 255: Changing Prices

Topic 260: Earnings per Share

Topic 270: Interim Reporting

Topic 272: Limited Liability Entities

Topic 274: Personal Financial Statements

Topic 275: Risks and Uncertainties

Topic 280: Segment Reporting

Codification Topics at the 300 Level

Topic 305: Cash and Cash Equivalents

Topic 310: Receivables

Topic 320: Investments-Debt and Equity Securities

Topic 320-10-35: Transfers of Securities: Between Categories

Topic 323: Investments-Equity Method and Joint Ventures

Topic 325: Investments-Other

Topic 330: Inventory

Topic 340: Other Assets and Deferred Costs

Topic 350: Intangibles-Goodwill and Other

Topic 360: Property, Plant, and Equipment

Codification Topics at the 400 Level

Topic 405: Liabilities

Topic 410: Asset Retirement and Environmental Obligations

Topic 420: Exit or Disposal Cost Obligations

Topic 430: Deferred Revenue

Topic 440: Commitments

Topic 450: Contingencies

Topic 460: Guarantees

Topic 470: Debt

Topic 480: Distinguishing Liabilities from Equity

U.S. GAAP Codification of Accounting Standards

Accounting Standards Codification, ASC, Overview

ASC Codification 100: General Principles

ASC Codification 200: Presentation

ASC Codification 300: Assets

ASC Codification 400: Liabilities

ASC Codification 500: Equity

ASC Codification 600: Revenue

ASC Codification 700: Expenses

ASC Codification 800: Broad Transactions

ASC Codification 900: Industry

U.S. GAAP by Codification Topic

105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

U.S. GAAP by Topic

Accounting Topics

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