Principles of Accounting: Chapter Twelve

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Chapter 12 provides coverage of accounting for current liabilities and payroll. There are many types of current liabilities, and numerous examples and measurement principles are cited. Great care is needed to correctly identify unique current liabilities, such as upcoming principal payments on long-term loans. Other challenges arise in reporting currently maturing debt subject to refinancing. The basics of accounting for notes payable are introduced in this chapter, and lay the foundation for more complex debt accounting issues that arise in the following chapter.

The measurement and reporting principles for contingent obligations are presented. Special attention is needed because these potential risks are not necessarily reported as liabilities.

Payroll accounting is introduced. It is important to learn about the full cost of a payroll, and how all such costs are to be recorded. Attention is also given to the legal duties of an employer to maintain proper payroll records and discharge fiduciary duties for remitting taxes to the government. The accounting consequences of other forms of employee compensation, such a pension, are briefly described.

Exercises

To aid in your understanding of this chapter, exercises with solutions are available for free download at Bookboon.com. You will find these exercises very helpful in providing models and guidelines for solving all of the problems at principlesofaccounting.com.

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Problems
Goals Achievement
Fill in the Blanks
Multiple Choice
Objectives
Key Terms

Problems: Chapter Twelve

Obtain the entire Liabilities/Equities Problem Workbook via the linked image at left. Our high volume production process makes this an economical option as compared to printing these files on your own printer!



Basic		Problem	Worksheet	Combined	Objective

	B-12.01				Contemplating the current liability definition

	B-12.02				Understanding typical current liabilities

	B-12.03				Accounting for notes payable

	B-12.04				Accounting for notes payable issued at a discount

	B-12.05				Unique features for certain interest calculations

	B-12.06				Criteria relating to contingent liabilities

	B-12.07				Warranty obligations

	B-12.08				Payroll preparation and recording

	B-12.09				Other employee benefit costs



Involved		Problem	Worksheet	Combined	Objective

	I-12.01				Recording and reporting for typical current liabilities

	I-12.02				Various notes payable transactions

	I-12.03				Various issues relating to contingencies

	I-12.04				Payroll records and entries

	I-12.05				Team-based approach for retirement plans/other post-employment benefits

The preceding table includes links to "Basic" and "Involved" problems. Each link will download the file containing a spreadsheet for the problem and a template worksheet on which you can prepare the solution electronically. If you see a light bulb icon on a worksheet, just mouse over above the icon and a comment box will appear. The comments include useful suggestions for improving your spreadsheet skills.

Solutions to these problems may be obtained from your instructor, however you may not post or redistribute, electronically or otherwise, any such solution material. Solution material may be provided to you for your sole use only, at the discretion of your individual instructor. Violation of this policy constitutes a copyright violation. Alternative problems, with solutions, may be found under the "Exercises" tab within each chapter. Video solutions to selected problems are available to students enrolling in the online course.