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Chapter 9_Notes

Chapter 9_Notes - Chapter 9 Reporting and Interpreting...

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Chapter 9 - Reporting and Interpreting Liabilities Liabilities Defined and Classified Liabilities – probable debts or olbligations that result from past transactions, which wil be paid with assets or services Current liabilities – short-term obligations that will be paid wthin the current operating cycke or one year, whichever is longer Liquidity – ability to pay current obligations Current ratio – current assets/current liabilities Current Liabilities Accounts payable turnover = COGS/ average accounts payable Average age of payables = 365 / turnover ratio Accrued liabilities – expenses that have been inurred buthave not been paid at the end of the accounting period Time value of money – interest that is associated with the use of money over time Interest = principal * rate * time Deferred revenues – are revenues that have been collected but not earned; they are liabilities until the goods or services are provided
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