ACC 211 Lecture 3: ACC 211 Chapt 9-12

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Businesses nance the acquisition of assets from two sources: funds supplied by creditors (debt) and funds provided by owners (equity). The mixture of debt and equity a business uses is called its capital structure. Debt is riskier than equity bc payments associated with debt are a company"s legal obligation. If a company cannot meet a required debt payment (either principal or interest), creditors may force the company to sell its assets to satisfy the debt. Liabilities are probable debts or obligations that will be paid with assets or services. Current liabilities are short-term obligations that will be paid within the current operating cycle or within one year of the balance sheet date whichever is longer. Accounts payable, also known as trade accounts payable, are obligations to pay for goods and services used in the basic operating activities of the business.

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