week4 - liabilities, bonds and long-term notes are listed....

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On the balance sheet, current liabilities are the first category on there. Current liabilities are obligations from current assets and is due within one year or the operating cycle (whichever is longer) Within the current liabilities section, there are list of different principle types of current liabilities listed separately. Notes payable (obligations in form of written notes such as lender written documentation for legal purposes) are the first to be listed under current liabilities. Then account payable is next and the rest such as current maturities of long term debt and accrued liabilities are listed based on their magnitude. After current liabilities, Long- term liabilities are listed next. Long term liabilities are debts a company is obligated to pay after one year. Within Long-term
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Unformatted text preview: liabilities, bonds and long-term notes are listed. The balance sheet includes detailed data like interest rates, maturity dates, conversion privileges, and assets pledged as collateral. On the statement of cash flow, it shows the company's debt information. It shows the flow of cash increasing or decreasing within the year from financial activities (debt transaction) or from operating activities (interest expense). By analizing the debt obligations carefully, it helps assess the company's ability to pay off its current as well as its long term obligations. It helps the company figure out if they are able to grow by obtain debt financing. Kimmel et al (2007). Financial Accounting: Tools for Business Decision Making. Hoboken, NJ. Wiley...
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