Any recomemdations on what I need to add? Or how is sounds? Thanks!

What factors determine whether contingent liabilities must be recorded?

What are the current liabilities that must be estimated? Include bonus plans, vacation, health, pension plans, and warranties in your explanation.

What liabilities are created by the payroll process? Why is this important to know?

What factors determine whether contingent liabilities must be recorded?

There are four factors that determine whether contingent liabilities must be recorded, and they have to do with the likelihood of the liability being realized. The first factor is the liability of being Remote. When a liability is remote it does not need to be disclosed. The second factor is the liability being reasonably possible. When a liability is reasonably possible then it needs to be described in a note to the financial statements. The third factor is the liability is probable and the expense can't be estimated. When a liability is probable, and the amount can't be estimated then it needs to described in a note to the financial statements. The last factor is the liability is probable, but the expense can be estimated. When a liability is probable and the expense can be estimated then an expense needs to be recorded based on estimations (Miller-Nobles, Mattison, & Matsumura, 2018).

What are the current liabilities that must be estimated? Include bonus plans, vacation, health, pension plans, and warranties in your explanation.

Current liabilities that must be estimated are bonus plans, vacation benefits, health benefits, pension plans, and warranties. For bonuses, the company must estimate a certain percentage of the net income to be given to employees that hit certain goals or milestones. Vacation benefits, health benefits, and pension plans are all estimated and recorded the same way. The company will estimate how much each of these benefits will cost each month and record as such in a journal entry. Warranties are estimated and recorded at the time of sale of a product. The company will estimate a certain percentage of each sale will go to covering the warranty if there are any future expenses tied to it (Miller-Nobles, Mattison, & Matsumura, 2018).

What liabilities are created by the payroll process? Why is this important to know?

The liabilities that are created by the payroll process are salary, wages, commission, bonuses, and benefits. It's important to know these liabilities so a company can account for and estimate their liabilities and future expenses. For some businesses, payroll can be the largest expense they have (Miller-Nobles, Mattison, & Matsumura, 2018).