Complete three accounting exercises related to liabilities and equity using a provided worksheet

Complete three accounting exercises related to liabilities and equity using a provided worksheet. Information about liabilities is most useful when the balance sheet identifies them as either current or long-term. Managers need to know when obligations are due so they can plan for them and take appropriate action. This is the essence of classifying liabilities.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

Competency 1: Analyze the relationship between business events and accounting.
Record bond discount amortization transactions, including bond issue, amortization and interest calculations, and an amortization table.
Record stock transactions, including preparation of a retained earnings statement.
Competency 2: Apply accounting principles as the language of business.
Prepare journal entries to account for short-term notes payable events and transactions.
Competency 3: Communicate the effects of business events on an organization's financial structure.
Determine short-term note maturity dates and interest due at maturity.Current Liabilities
All liabilities for an organization reported in the financial statements exhibit three distinct characteristics: (1) definition, (2) classification, and (3) uncertainty. No liability can be reported when one or more of these characteristics is missing. As an example of liability definition, most organizations expect to pay salaries or wages to their employees in the months and years to come; however, these future payments are not liabilities because no past event, such as employee work, resulted in a present obligation.

Uncertainty in liabilities involves addressing three important questions: (1) Whom to pay? (2) When to pay? (3) How much to pay? The answers to these questions helps accounting employees make the correct entries, post to the correct customer accounts, and reconcile liability amounts to the financial statements.

Long-Term Liability and Corporate Stock
Organizational projects that require large amounts of money often are funded from the issuance of bonds or corporate stock. Some examples of organizations that use this form of financing include for-profit and non-profit companies, government units, water authorities, and school districts. In return for financing these large projects, bonds promise to repay the lender with interest. Purchasers of corporate stock do so with the expectation of dividend earnings and stock value appreciation.

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Questions to Consider
To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.

Assume that your company has a facility located where disastrous weather conditions often occur. As the company accountant, how would you report a probable loss from a future disaster as a liability on the company balance sheet?
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Required Resources
The following resources are required to complete the assessment.

Capella Resources
Click the links provided to view the following resources:

Accounting for Liabilities and Equity Worksheet.
Suggested Resources
The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.

Capella Resources
Click the links provided to view the following resources:

Assessment 4 Practice Problems Worksheet.
Assessment 4 Practice Problems Answer Key.
Library Resources
The following e-books or articles from the Capella University Library are linked directly in this course:

Haber, J. R. (2003). Accounting demystified. New York, NY: AMACOM Books.
Berry, L. E. (2010). Financial accounting demystified. New York, NY: McGraw-Hill Professional Publishing.
Course Library Guide
A Capella University library guide has been created specifically for your course business research. You are encouraged to refer to the resources in the Business Research Library Guide to help direct your research. See the Accounting tab for specialized resources.

Vitalsource Resources
The resources listed below are relevant to the topics and assessments in this course and are not required. Unless noted otherwise, these materials are available via the VitalSource Bookshelf link in the courseroom, located in your Course Tools.

Wild, J. J., & Shaw, K. W. (2019). Financial and managerial accounting: Information for decisions (8th ed.). New York, NY: McGraw-Hill.
Assessment Instructions
This assessment consists of three accounting exercises. The exercises are provided in the Accounting for Liabilities and Equity Worksheet, linked in Resources under the Required Resources heading. Use this worksheet to record and submit your solutions for Exercises 4-1, 4-2, and 4-3.

In addition, practice problems for each exercise are provided in the Assessment 4 Practice Problems Worksheet, linked in the Resources under the Suggested Resources heading. The practice problems are optional, but if you choose to complete them, an answer key is also linked in the Resources for you to use to check your work.

Submit your Accounting for Liabilities and Equity Worksheet for faculty evaluation. Please do not submit completed practice problems with your assessment.

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