Liabilities - Introduction

This chapter will focus on the liability side of the balance sheet, particularly current and long-term liabilities including capital and operating leases. Pay close attention to the section concerning the classification of leases as capital vs. operating, and how each classification affects other accounts. This concept is tested heavily in the CFA Level 1 exam.

Current Liability Basics


Related Articles
  1. Professionals

    Capital And Operating Leases

    CFA Level 1 - Capital And Operating Leases. Lists the requirements a lease must satisfy to be classified as an operating lease. Examines the incentives of operating over capital leases.
  2. Economics

    How Does an Operating Lease Work?

    Operating lease is a term used mostly in accounting to denote a lease that gives the lessee rights to use and operate an asset without ownership.
  3. Professionals

    Effects Of Capital Vs. Operating Leases

    CFA Level 1 - Effects Of Capital Vs. Operating Leases. Examines the impact on lease classification on financial statements. Compares the differences between operating and capital leases.
  4. Professionals

    Liabilities

    CFA Level 1: Section 9 - Liabilities
  5. Professionals

    Determining The Value Of The Lease And The Lease Asset

    CFA Level 1 - Determining The Value Of The Lease And The Lease Asset. An in depth look at operating vs. capital leases and their impact on financial statements and ratios. Provides sample calculations ...
  6. Economics

    What is a Capital Lease?

    A lease considered to have the economic characteristics of asset ownership.
  7. Professionals

    Introduction

    CFA Level 1 - Section 8 Assets. Briefly describes the asset side of a balance sheet and what section 8 will be covering.
  8. Professionals

    Accounting For Leases

    CFA Level 1 - Accounting For Leases. Learn the process of accounting for leases. Explains various criteria a lease must satisfy to become a sales-type or direct-financing lease.
  9. Savings

    Is There a Way to Get Out of Your Car Lease Early?

    For those who no longer want their car for whatever reason, transferring the lease to an interested party can be a particularly appealing choice.
  10. Home & Auto

    When Is Buying A Car Better Than Leasing?

    People who lease a car are often more concerned with the short-term picture.
RELATED TERMS
  1. Capital Lease

    A lease considered to have the economic characteristics of asset ...
  2. Leasehold

    An accounting term used to classify an asset on a company's balance ...
  3. Operating Lease

    A contract that allows for the use of an asset, but does not ...
  4. Lease Utilization

    A financial ratio that measures how much a company uses leasing ...
  5. Synthetic Lease

    An operating lease that is structured in a way so that it is ...
  6. Bargain Purchase Option

    An option in a lease agreement that allows the lessee to purchase ...
RELATED FAQS
  1. Why might a bond agreement limit the amount of assets that the firm can lease?

    Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ... Read Answer >>
  2. Do banks have working capital?

    Learn the reasons why banks do not have working capital due to the lack of typical current assets and liabilities accounts, ... Read Answer >>
  3. What kinds of liabilities appear on the balance sheet?

    Learn what current and non-current liabilities are, the difference between the two, and examples of liabilities that a company ... Read Answer >>
  4. On which financial statements does a company report its long-term debt?

    Discover which financial statements are used to report a company’s long-term debt, as well as how a company uses debt to ... Read Answer >>
  5. You are currently reviewing the following information for JKL Corp ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  6. What is the difference between an expense and a liability?

    Learn what liabilities and expenses are, which financial statements they are listed on, and the differences between liabilities ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center