1.
Current Liabilities
The following are accounts commonly used in accounting information systems:
1. Accounts payable
2.Saaries payable
3.Common stock
4.Current portion of long-term debt
5.Unearned revenue
6.Notes payable (due in 60 days)
7.Taxes payable
8.Allowance for doubtful accounts
9.Notes payable (due in 2 years)
Required: Identify whether each item would be classified on a balance sheet as a current liabiity,
a long-term liability, or something else.
Solution
(1) Accounts Payable: Short term in nature of settlement, so Current Liability
(2) Salaries Payable: Short term in nature of settlement, so Current Liability
(3) Common Stock: Equity
(4) Current Portion of long term debt: Short term in nature of settlement, so Current Liability

2.
(5) Unearned Revenue: It is a revenue earned for which service has not yet been paid (For
example: For a magazine publisher, it can be annual subscription received at beginning of year.
Revenue has been earned, but the magazine has not been delivered to the customer). This is a
current liablity.
(6) Notes Payable: Short term in nature of settlement, so Current Liability
(7) Taxes Payable: Short term in nature of settlement, so Current Liability
(8) Allowance for Doubtful Accounts: This is a Contra-Asset account - this amount gets
deducted from accounts receivable (an asset) as an unrecoverable amount. A contra-asset
account falls under current liabilities (Since accounts receivable is a current asset)
(9) Notes Payable: Long term in nature of settlement, so Long term Liability
Note: Short-term refers to settlement being in less than 1 year (Or 1 accounting period), long-
term refers to settlement being more than 1 year (Or 1 accounting period).