Chapter 22, Problem 1RQ

List four examples of interest-bearing liability accounts commonly found in balance sheets. What characteristics do these liabilities have in common? How do they differ?

To determine

Determine four examples of interest-bearing liability accounts found in balance sheet and their common characteristics and differences

Explanation of Solution

The four examples of interest-bearing liabilities that are commonly found in balance sheet are contract payable, bonds payable, notes payable and mortgage payable.

The common characteristics they share are:

• Each of this liability is generally high in amount and few of them affect adversely.
• Equity, interest, and debt are directly related to each other.
• None of the material can be excluded as any one of them can be a material in its own.

They differ from each other on the basis of their nature and representations.