7. Many companies do not segregate the sales tax collected and the amount of the sale at the time of the sale.
8. A company must accrue a liability for sick pay that accumulates but does not vest.
9. Companies report the amount of social security taxes withheld from employees as well as the companies’ matching portion as current liabilities until they are remitted.
10. Accumulated rights exist when an employer has an obligation to make payment to an employee even after terminating his employment.
11. Companies should recognize the expense and related liability for compensated absences in the year earned by employees.
12. Companies should accrue an estimated loss from a loss contingency if information available prior to the issuance of financial statements indicates that it is probable that a liability has been incurred.
13. A company discloses gain contingencies in the notes only when a high probability exists for realizing them.
14. The expected profit from a sales type warranty that covers several years should all be recognized in the period the warranty is sold.
15. The fair value of an asset retirement obligation is recorded as both an increase to the related asset and a liability.
16. The cause for litigation must have occurred on or before the date of the financial statements to report a liability in the financial statements.