Chapter 13

The flashcards below were created by user Anonymous on FreezingBlue Flashcards.

  1. What is a liability?
    Probable future Sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events
  2. What is a current liability?
    obligations whose liquidation is expected to require current assets
  3. Typical current liabilities
    • Accounts payable
    • Notes payable
    • current maturities of long-term debt
    • short-term obligations expected to be refinanced
    • dividends payable
    • customer advances and deposits
    • unearned revenues
    • sales tax payable
    • income taxes payable
    • employee-related liabilities
  4. Accounts payable
    definition
    2 ways of recording
    Balances owed to others for goods, supplies or services

    Can be recorded using gross or net method
  5. Gross method
    • ??? XXX
    • Accts Payable XXX

    • when paid:
    • Accts payable XXX
    • Cash XXX
    • Sales discounts XXX
  6. Net method
    • Inventory XXX
    • A/P XXX
    • (recorded less the sales discount)

    • if paid past the discount date:
    • A/P XXX
    • Cash XXX
    • Sales Discounts forfeited XXX
  7. Interest-bearing note
    The amount of the note and the amount of cash received are the same

    Interest accrues over time
  8. Zero-interest bearing note
    The amount of the note and cash are different. The difference is recorded as a discount or premium on notes payable and is amortized over the life of the note and charged to interest expense.
Author
ID
61510
Card Set
Chapter 13
Description
Current Liabilities and Contingencies
Updated
Show Answers