Develop a brief answer to each of the following questions:

1. Ned Johnson, a star college basketball player, received a contract from the Midwest Blazers to play professional basketball. The contract calls for a salary of $300,000 a year for four years, dependent on his making the team in each of those years. Should this contract be considered a liability and recorded on the books of the basketball team?

2. Is increasing payables turnover good or bad for a company? Why or why not?

3. Do adjusting entries involving estimated liabilities and accruals ever affect cash flows?

4. When would a commitment be recognized in the accounting records?

Discussion Questions