CPA Exam Lab
Section 2: 30–40%2G

Payables and Accrued Liabilities

Payroll questions tend to be straightforward calculations — but pension accounting is where AICPA makes it hard. The net pension liability or asset on the balance sheet is just projected benefit obligation minus plan assets. The trap: candidates try to record the full pension expense as one line item, but components like prior service cost and actuarial gains/losses go through OCI first, then amortize into income.

What AICPA Wants You to Know

  • 1Classify liabilities as current vs. non-current using the one-year or operating cycle rule
  • 2Apply the refinancing exception for short-term debt to be classified as long-term
  • 3Record accrued liabilities for wages, interest, warranties, and bonuses
  • 4Account for deferred revenue and when it converts to earned revenue
  • 5Identify the current portion of long-term debt