ST Liabilities1 - Repor ting and I nt er preting Repor ting...

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Unformatted text preview: Repor ting and I nt er preting Repor ting and I nt er preting Liabilities Liabilities Chapter 9 9-2 Understanding the Business The acquisition of assets is financed fr om two sour ces: Debt - funds from creditors Equity - funds from owners 9-3 Liabilities Defined and Classified Defined as probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. Maturity = 1 year or less Maturity > 1 year Current Liabilities Noncurrent Liabilities 9-4 Cur rent Liabilities 9-5 Working Capital and Cash Flows Working Capital Working Capital = Current Assets- Current Liabilities Changes in working capital accounts are important to managers and analysts because they have a direct impact on cash flows from operating activities reported on the statement of cash flows. 9-6 Not es Payable A note payable specifies the interest rate associated with the borrowing. To the lender, interest is a revenue . To the borrower, interest is an expense . . Interest = Principal × Interest Rate × Time When computing interest for one When computing interest for one year, “Time” equals 1. When the year, “Time” equals 1. When the computation period is less than computation period is less than one year, then “Time” is a fraction....
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This note was uploaded on 07/15/2011 for the course ACC 360 taught by Professor Marshallhunt during the Spring '09 term at University of Michigan-Dearborn.

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ST Liabilities1 - Repor ting and I nt er preting Repor ting...

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