{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

M351_Notes-Day_1_Cur_Liab

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

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
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 Cash ............................................................. 153,000 *150,000 x (4/12) x .06 Note that four months begins on February 1 and ends on May 31. 1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4. Zero Coupon Note and Discount on Notes Payable: A zero coupon note pays no interest until maturity and is typically measured at borrowing at its maturity amount less a discount.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern