Chapter Ⅳ Liabilities



Article 34. A liability is debt borne by an enterprise, measurable by money va1ue, which will be paid to a creditor using assets, or services.



Article 35. Liabilities are generally classified into current liabilities and long-term liabilities.



Article 36. Current liabilities refer to the debts which should be paid off within a year or an operating cycle 1onger than a year, including short-term loans payable, notes payable, accounts payab1e, advances from customers, accrued payro1l, taxes payable, profits payab1e, dividends payable, other payables, provision for expenses, etc..



All current liabilities shall be accounted for at actual amount incurred. Liabilities incurred but the amount needed to be estimated shall be accounted for at a reasonable estimate, and then adjusted after actual amount was given.



Balance of current liabilities shall be shown by item in accounting statements.



Article 37. Long-term liabilities refer to the debts which will be redeemed after a year or an operating cycle longer than a year, including long-term loans payable, bonds payable, long-term accounts payable, etc..



Long-term loans payable include the loans borrowed from f1nancial institutions and other units. It shall be

accounted independently according to the different characters of the loan and at the amount actually incurred.



Bonds shall be accounted for at par value. When bonds are issued in premium or discount, the difference between the amount actually obtained and the par value shall be accounted independently, and be written off periodically by increasing or decreasing interest expenses of every period until bonds mature.



Long-term accounts payable include accounts payable for importing equipments, accounts payable for fixed assets financed by leasing. Long-term accounts payable shall be accounted at actual amounts.



Long-term liabilities shall be shown by item of long-term loans, bonds payable, long-term accounts payable in accounting statements.



Long-term liabilities to be matured and payable within a year sha11 be shown as a separate item under the caption of current liabilities.
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