DEBTA liability is a present obligation that entails settlement by probable future transfer or use of cash, goods, or services and the transaction or event creating the unavoidable obligation has already occurred. Current liabilities will be liquidated by using current assets or by creating other current liabilities within one year or the current operating cycle, whichever is longer.Accounts payable represent obligations owed to others for goods and services purchased on open account. Notes payable are written promises to pay a certain sum of money on a specified future date (short-term or long-term depending on the due date). Notes may be interest-bearing or noninterest-bearing. The former is reported at face value; the latter is reported at present value. A two-year $100,000 interest-bearing note at 10% is reported at $100,000; a two-year $100,000 noninterest-bearing note for which $85,100 is received and $100,000 is to be paid back is reported at $85,100 on receipt and $90,909 after one year. Unearned or deferred revenues occur when a company receives cash in advance of
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