MGMT 20000 Chapter 8: Chapter 8 Class Notes
30 Jun 2016
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Liability: a present responsibility to sacrifice assets in the future due to a transaction or other event that happened in the past. Learning objective 1 distinguish between current and long-term liabilities. Current: payable within one year or an operating cycle. Long-term: payable more than one year or an operating cycle. Learning objective 2 account for notes payable and interest expense. Note signed by a firm promising to repay the amount borrowed plus interest. Recording interest payable and repayment of notes payable. Repayment of note: debit, debit, debit, credit. Line of credit: informal agreement, permits a company to borrow up to prearranged limit, no formal loan procedures and paperwork. Commercial paper: companies borrows from another company rather than from a bank, sold with maturities normally ranging from 30 to 270 days, interest rate is usually lower than a bank loan. Amounts owed to suppliers of merchandise or services. Learning objective 3 account for employee and employer payroll liabilities.
