Chapter 14, Problem 14E

To determine

Liabilities Section in Balance Sheet:

The Liabilities section of balance sheet consists of all outside liabilities and is divided in to two parts i.e. current liabilities and long term liabilities. These are discussed as under:

Current liabilities: These are those liabilities which need to be paid off within twelve months from the date of preparation of financial statements. These liabilities includes the liabilities which mainly arises from the operations of the business like Accounts payable, expense payable, etc.

Long term liabilities: The Liabilities which has been taken for a long time generally more than an year shall be termed as long term liabilities. These are the liabilities which are taken for long term financing of the business and includes Bonds payable, long term notes payable, etc.

The Preparation of Liabilities section of Balance sheet.