Question

explain various list of liabilities according to PTA and PIA​

Answer 1

The list of liabilities according to PTA and PIA is divided into three sects. They are given as follows:

Explanation:

1. Current liabilities

• Or short-term liabilities are obligations or debts that should be paid within a year.

• These liabilities should be intimately scrutinized by management to make sure that the organization holds enough liquidity from current assets to ensure that the debts or obligations can be met.

• Examples: Accounts payable, interest payable, income taxes payable, etc.

2. Non-current liabilities

• Or long-term liabilities are obligations or debts that are to be paid in over a year’s time.  

• Non-current liabilities are vital in determining an organization’s long-term solvency. If firms are unable to pay off their long-term liabilities as they become due, then the organization will face a solvency crisis.

• Examples: Bonds payable, long-term notes payable, etc.

3. Contingent liabilities

• Contingent liabilities are liabilities that may arise, depending on the result of a future event.

• Consequently, contingent liabilities are latent liabilities. In accounting principles, a contingent liability is only logged if the liability is probable and the expanse of the resulting liability can be rationally estimated.

• Examples: Lawsuits, product warranties, etc.