M351_Notes-Day_1_Cur_Liab - M351 Notes, Class 1: Current...

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M351 Notes, Class 1: Current Liabilities, pp. 617-631 A. Liability definition: probable future outflow arising from a present obligation resulting from past transactions 1. Current Liability definition: a liability that will likely require an outflow within the longer of one year or one operating cycle and the outflow will probably use existing resources (Current Assets). 2. A list of Current Liabilities appears on page 619. 3. Interest on a Current (short term) Note Payable with a maturity of one year or less: Interest Expense = p x t x i Where p = amount borrowed, t = time in years, i = annual interest rate For example: assume ABC Company borrowed $150,000 cash on February 1 on a four-month 6% note. February 1 Cash. ................................................................... 150,000 Notes Payable. ............................................. 150,000 May 31 Interest Expense*. .............................................. 3,000 Notes Payable. .................................................... 150,000
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This note was uploaded on 10/14/2009 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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M351_Notes-Day_1_Cur_Liab - M351 Notes, Class 1: Current...

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