AFM123 Lecture Notes - Lecture 1: Promissory Note, Life Insurance, Canada Pension Plan

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All liabilities are recorded at the amount of the obligation owed on that particular date. They will either be classified as current liabilities or long-term liabilities. Current liabilities will be paid within one year from the balance sheet. Long term liabilities will be paid later than one year from the balance sheet date. In some cases, the amount owed changes with the passage of time since interest is being charged (note payable, loan payable, mortgage payable). In other cases, the amount owed does not change until it is paid (amounts owed under accounts payable where interest is not charged). Accounts payable buy merchandise on account; e. g. ,000 worth of inventory, due in 30 days. Notes payable promissory notes signed by officer and usually interest is charged; e. g. ,000 note payable due in one month plus interest at 12% p. a. (i. e. receive ,000 cash; repay ,020 in one month)

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