COMMERCE 1AA3 Study Guide - Final Guide: Effective Interest Rate, Contingent Liability, Promissory Note
12 Dec 2016
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A present obligation; settled by probable future transfer or use of cash, goods, or services little or no discretion to avoid the obligation. Current liabilities: obligations due within one year: known amounts (e. g. , a/p, n/p, and salaries payable, estimated amounts (e. g. , contingent liabilities and warranties) Short-term debt expected to be refinanced will not be classified as a current. Amounts owed for goods, supplies or services purchased on open account. Notes payable are written promises to pay a sum of money on a specified future date: arises from purchases, financing or other transactions. Notes payable may be classified as either short-term or long-term. Notes payable may be interest-bearing or zero-interest-bearing (non-interest-bearing: in both cases, interest expense is determined whenever financial statements are prepared. Interest-bearing notes: the interest rate is stated explicitly on the note. For long-term notes, payments can be for: interest only, equal payments consisting of interest and principal fixed principal plus interest on the remaining balance, or.
