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liabilities ch 3

liabilities ch 3 - II Known(determinable liabilities A...

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II. Known (determinable) liabilities A. Known liabilities: liabilities with no uncertainty set by measurable agreements and contracts 1. Also called definitely determinable liabilities B. Accounts payable 1. Also called trade accounts payable 2. Created by purchases made on credit C. Sales tax payable 1. Sellers collect sales taxes from customers when sales occur and remits these collections to the proper government agency 2. Current liabilities 3. Accounting: a) Debit cash b) Credit sales c) Credit sales tax payable D. Unearned revenues 1. Also called deferred revenues, collections in advance or prepayments 2. Amounts received in advance from customers for future payments 3. Example: season ticket sales for sporting events 4. Accounting: a) Receiving of unearned revenue * Debit cash * Credit unearned revenue b) Deliverance of service for which unearned revenue was intended * Debit unearned revenue * Credit revenue E. Short term notes payable 1. A written promise to pay a specified amount on a definite future date within the longer of a year or one operating cycle
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liabilities ch 3 - II Known(determinable liabilities A...

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