Chapter 13 NEW

Chapter 13 NEW - Current Liabilities and Contingencies...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Accounting 124 / Current Liabilities 1 Current Liabilities and Contingencies Chapter 13 Prepared by: Prof. Elizabeth K. Venuti
Background image of page 1

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

View Full DocumentRight Arrow Icon
Accounting 124 / Current Liabilities 2 Liabilities – Basic Concepts Liabilities are: Probable future sacrifices of economic benefits Arising from present obligations To transfer assets or to provide services in the future As a result of past transactions or events.
Background image of page 2
Accounting 124 / Current Liabilities 3 Current Liabilities – Basic Concepts Current liabilities are: Obligations whose liquidation is reasonably expected to require The use of current assets or the creation of other current liabilities Within one year or operating cycle, whichever is longer.
Background image of page 3

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

View Full DocumentRight Arrow Icon
Accounting 124 / Current Liabilities 4 Type of current liabilities Accounts payable Accrued expenses Notes payable Current maturities of long-term debt Returnable deposits Unearned revenues Taxes payable Cash or property dividends payable
Background image of page 4
Accounting 124 / Current Liabilities 5 Accounts payable Balances owed to others for goods, supplies or services purchased on open account. Notes payable: Written promises (‘promissory note’) to pay a certain sum of money on a specified future date. Created from purchases (‘trade notes payable’), financing or other transactions. Short-term or long-term depending upon due date. Interest-bearing or non-interest bearing.
Background image of page 5

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

View Full DocumentRight Arrow Icon
Accounting 124 / Current Liabilities 6 Notes Payable – Interest Interest-bearing notes: Interest expense based on effective rate and accrued each period. Zero-interest-bearing notes: Borrower required at maturity to pay back an amount greater than the cash received on issuance date. Amount received is the present value. Amount due at maturity is the future value. Difference between present value and future value is the discount on notes payable. Interest is imputed and interest expense is recorded at end of each period.
Background image of page 6
Accounting 124 / Current Liabilities 7 Accounts & Notes Payable - Example Record the following transactions for Austin Corporation: Sept. 1, purchased $50,000 worth of inventory on
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Chapter 13 NEW - Current Liabilities and Contingencies...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online