Individual Assignment (Exercises)
Resource:Financial Accounting: Tools for Business Decision Making
Prepare responses to the following assignment from the e-text: * Ch. 10: Questions 1, 7, 8, & 19; Brief Exercise BE10-1; and Financial Reporting Problem BYP10-1 * Ch. 11: Ethics Case: BYP11-10 Resources:Financial and Managerial Accounting: The Basis for Business Decisions
Prepare responses to the following assignment from the e-text: Ch. 11: Internet Assignment 11-1 * *
Georgia Lazenby believes a current liability is a debtthat can be expected to be paid in one year. Is Georgiacorrect? Explain.
Yes, Georgia Lazenbyhas the correct idea in her understanding of current liabilities. In accounting, a current liability is a debt or obligation that is expected to be paid off within a year or within the company’s operating cycle, whichever is longer. The current liabilities can be paid from existing current assets or by creating additional current liabilities.
(a) What are long-term liabilities? Give two examples.
(b) What is a bond?
ANSWER a. Long-term liabilities are debts or obligations expected to be paid in more than one year. What differentiates current from long-term liabilities is how long into the future the liability is due. Current liabilities are expected to be settled within a year but long-term liabilities are expected to be settled in a timeframe longer than a year. Examples of long-term liabilities are corporate bonds and notes with maturities greater than one year.
b. A bond is an interest bearing debt security issued with a maturity longer than one year. Bonds can be issued by corporations or governments to raise funds to finance capital needs. The funds are borrowed for a period of time at a fixed interest rate.
Contrast these types of bonds:
(a) Secured and unsecured.
(b) Convertible and callable.
ANSWER (a) The
References: Kimmel, P., Weygandt, J., &Kieso, D. (2007).Financial Accounting: Tools for Business Decision Making.(4thed.) Hoboken, NJ Wiley.