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Describe current liabilities that must be estimated

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There are two types of current liabilities that must be estimated. Describe them and explain why they must be estimated. How are the financial statements affected if they are not estimated?

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This 230 word cited solution explains the two types of estimated liabilities with examples.

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There are actually three types of current liabilities, but the first category are clearly determined amounts. They might include obligations represented by a contract, an invoice or that which can be measured exactly.

The other two involve estimates:

Estimated liabilities
Contingent liabilities

Estimated liabilities are those which are based on some future event that isn't known for certain yet. Warranties are a good ...

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