Class Notes (922,490)
CA (542,854)
UTSC (32,922)
MGA (249)
MGAB01H3 (77)
Liang Chen (34)
Lecture

Accounting for Current Liabilities

2 Pages
95 Views

Department
Financial Accounting
Course Code
MGAB01H3
Professor
Liang Chen

This preview shows half of the first page. Sign up to view the full 2 pages of the document.
Accounting for Current Liabilities
¾ Two key features: it is likely to be paid within one year or operating cycle, and it will
be paid from existing current assets or through the creation of other current liabilities
¾ Liabilities are described as definitely determinable, estimable, or contingent
Definitely Determinable Liabilities
¾ This is one with a known amount, payee, and due date
Operating Line of Credit
¾ This means that the company has been pre-authorized by the bank to borrow money,
up to a preset limit, when it is needed. Collateral is usually required by the bank as
protection in the event of a default on the loan. A number of companies show a
negative, or overdrawn, cash balance at year end as a result of using their line of
credit. This amount is known as bank indebtedness, bank overdraft, or bank advances
Notes Payable
¾ Notes payable are obligations in the form of written promissory notes. Most notes are
interest-bearing. Interest is due at maturity; however, interest accrues over the life of
the note and must be recorded periodically
Sales Taxes Payable
¾ Companies serve only as a collection agent for the government. Sales taxes are not
reported as an expense, nor should it be recorded as a form of revenue
Payroll and Employee Benefits
¾ (PSOR\HUVDUHREOLJDWHGWRSD\IRUHPSOR\HHV¶VDODULHVRUZDJHV6DODULHVDUHDQ
annual amount, whereas wages are based on a rate per hour. The amount in the
Salaries and Wages expense account is called gross earnings. The amount less
deductions (i.e. taxes, union) is called the net pay. With every payroll, the employer
incurs liabilities to pay various payroll costs (i.e. their share of CPP or EI)
Unearned Revenues
¾ When the advance payment is received, Cash is debited. A current liability account
identifying the source of the unearned revenue is credited. When the revenue is
earned, the unearned revenue account is debited. An earned revenue account is
credited
www.notesolution.com

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
Accounting for Current Liabilities Two key features: it is likely to be paid within one year or operating cycle, and it will be paid from existing current assets or through the creation of other current liabilities Liabilities are described as definitely determinable, estimable, or contingent Definitely Determinable Liabilities This is one with a known amount, payee, and due date Operating Line of Credit This means that the company has been pre-authorized by the bank to borrow money, up to a preset limit, when it is needed. Collateral is usually required by the bank as protection in the event of a default on the loan. A number of companies show a negative, or overdrawn, cash balance at year end as a result of using their line of credit. This amount is known as bank indebtedness, bank overdraft, or bank advances Notes Payable Notes payable are obligations in the form of written promissory notes. Most notes are interest-bearing. Interest is due at maturity; however, interest accrues over the
More Less
Unlock Document


Only half of the first page are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit