As a tutor for beginning accounting students, you are reviewing the first balance sheet of one of your students.You make the comment that current liabilities can be classified into three groups and your student does not believe you.
Required:
Write a brief note that identifies the three groups, including an explanation of the nature of the accounts included in each group.

Current liabilities can be classified into three groups.They are current liabilities having a definite amount, current liabilities whose amount depends on operations, and current liabilities whose amount must be estimated.The first group consists of liabilities that result from contracts or the existence of laws.In these cases, the debt and its maturity are known with reasonable certainty.The second group contains liabilities that arise out of operations, and their amounts depend on these operations.The third group contains liabilities whose amounts must be estimated as of the date of the balance sheet.The amounts of these liabilities usually depend on some future event occurring; therefore, they are a type of contingent liability.