Determinable Liabilities In Financial Accounting

Liabilities are creditors’ claims on assets. Most liabilities arise from situations with little uncertainty. They are set by agreements, contracts, or laws and are measurable. These liabilities are known liabilities and also called determinable liabilities.
They are divided into several components, namely trade/account payable, notes payable, bank overdraft, GST payable, leases, bank loan, accruals (used services paid later), wages payable, unearned revenue and taxes payable, which are measured at their current cash equivalent (the amount a creditor would accept to cancel their debt) at the time incurred.
Liabilities are probable debts or obligations that result from past transactions, which will be paid with assets or services. Liabilities

Revenue is offset with all of the expenses incurred in generating that revenue, thus providing a measure of the overall profitability of the economic activity.
The policy of recognizing revenue in the accounting records when it is earned and recognizing expenses when the related goods or services are used is called the accrual basis of accounting. The purpose of accrual accounting is to measure the profitability of the economic activities conducted during the accounting period.
The revenue recognition principle states that a business must recognize revenue in its records in the period in which a sale occurs, even though the business may collect payment from the customer in a different period. The result is that a company’s reported revenue for a particular period typically differs from the cash it collects from customers during that period.
Under the revenue recognition principle, four criteria or conditions must normally be met for revenue to be recognized. If any of the following criteria is not met, revenue is normally not recognized and cannot be recorded.
A. Goods have been delivered or services have been

There is persuasive evidence of an arrangement for customer payment.
C. The price of goods or services is known.
D. Collection from the customer is reasonably assured.
Revenue Recognition Principle Example
Assume a small business sells a product to a customer for $500 at the end of the current quarter. Assume the bill is given to the customer and the expected payment is by the next quarter. Under the revenue recognition principle, the full $500 as revenue in your records would be recognized in the current quarter because the sale occurred in the current quarter. The timing of the payment in the next quarter does not affect when you record the revenue.
For the matching (expense recognition) principle:
The expense recognition principle requires expenses to be reported in the same accounting period as the sales they help produce. This means that if extending credit to customers help produce and or improve sales, the bad debts expense linked to those sales are matched and reported in the same