BUS206 Quiz: Accounting Unit 4 Challenge 3

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16 Mar 2022

Document Summary

Current liabilities show a company"s obligation to pay debts to others within one year or the operating cycle, whichever is shorter. In other words, current liabilities represent a business"s short-term debt obligations. There are several types of current liabilities: accounts payable, sales tax payable, unearned revenue, contingent and uncertain liabilities. Sales tax payable is collected from customers at the time of sale. All businesses have to collect that sales tax at the time of sale, if the state in which it conducts business has a sales tax. It represents a percentage of sales owed to the state. Sales tax gets paid when the business collects the sales tax from the customers at the time of sale, and then remits payment to the government, whether on a monthly, quarterly, or annual basis. Unearned revenue: a liability account that records cash received before revenue is earned.

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