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Unformatted text preview: term the liability is divided into current and non-current sections C. Uncertainty in liabilities 1. Uncertainty in whom to pay a) Example: a note for which a specific amount is payable to the note's holder on a specific date; holder in unknown until the maturity date b) Liability is reported on the balance sheet 2. Uncertainty in when to pay a) Example: legal services agency accepts fees in advance, creating a liability that is settled when legal issues arise b) Reported as current liabilities c) Liability is reported on the balance sheet 3. Uncertainty in how much to pay a) Example: when using electric power, the cost is incurred and the liability is created before a bill is received b) Liability is reported on the balance sheet c) If balance sheet is prepared before bill is received, liability amount is estimated...
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This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10