BUSI 1101 Study Guide - Final Guide: Cash Cash, Current Liability, Deferred Income
Document Summary
Debt that will be paid within one year from the date on the statement of financial position or within on operating cycle. It will be paid from existing current assets or though the creation of other current liabilities. Operating line of credit: the company has been pre-authorized by the bank to borrow money, up to a preset limit, when it is needed. Interest is usually charged at a floating interest rate on any amounts used from the line of credit. A floating interest rate changes as market interest rates change and is usually based o the prime borrowing rate. A non-current liability is an obligation that is expected to be paid after one year or longer. Examples: bonds payable, finance leases, deferred income taxes. Financial liability: contractual obligations to pay cash in the future. Bond: a promise to repay a specified amount of money at a fixed future date in addition to period interest payments.
