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InventoriesNoncurrent assets:Assets not qualifying for presentation under the current heading are classified under a number of noncurrent headings.oInvestmentsoProperty, plant, and equipment (i.e. land, building, machinery, tools)oIntangible assets (i.e. goodwill, patents, trademark, franchises)oOther noncurrent assets, such as deferred income tax assets (i.e. long-term receivable, deferred tax assets)oLiabilities:Current liabilities:Current liabilitiesare those obligations that are reasonably expected to be paid within one yearoAccounts payableAn account payablearises when a business purchases goods or services on credit.
It is really just the flip side of an account receivable—when you have a payable, the business you owe has a receivable.Credit terms generally require that the purchaser pay the amount duewithin 30 to 60 days and seldom require the payment of interest. Accounts payable do not require a formal agreement or contract.oNotes PayableA note payabletypically arises when a business borrows money or purchases goods or services from a company that requires a formal agreement or contract (like when you sign a contract to lease an apartment or buy a car). This formal agreement or contract is what distinguishes the note payable from an account payable.oSalaries payableoWages, interest, and taxes payableoAccrued expensesoCurrent portion of long-term obligations/debtThe current portion of long-term debt is the amount of long-term debt principal that is due within the next year. At the end of each accounting period, the long-term debt that is due during the next year is reclassified as a current liability.Since the reclassification of most long-term debt as current does not usually change the accounts or amounts involved, journal entries are not required.oOther PayablesOther payables for most retail companies include sales taxes, usage taxes, or excise taxes for various state, local, and federal taxing authorities.These taxes are money collected from the customer for the governmental unit levying the tax. These tax collections are liabilities until they are paid to the taxing authority.oWithholding and Payroll TaxesBusinesses are required to withhold taxes from employees’ earnings and to pay taxes based on wages and salaries paid to employees.These withholding and payroll taxes are liabilities until they are paid to the taxing authority.Two sources for these taxes are:Employees,that must pay certain taxes that are ‘‘withheld’’ from their paycheck. This is the difference between gross pay and net pay.The business itself,which must pay certain taxes based on employee payrolls, like matching contributions of Social Security and Medicare and fringe benefits.