Business Administration - Accounting & Financial Planning ACC220 Study Guide - John Wiley & Sons, Contingent Liability, Accounts Payable
Document Summary
A determinable liability is also referred to as certain liabilities or known liabilities. Examples include accounts payable, salaries payable, hst payable, and cpp and ei payable. The transaction does not meet the definition of a liability. A liability is defined as a present obligation, arising from past events, to make future payments of assets or services. A commitment to purchase is usually not an obligation and no past event (a purchase) has occurred since goods have not been delivered or services received. An operating line of credit is a pre-authorized bank loan that allows a company to borrow up to a pre-set limit, and repay the loan, as needed. When the company borrows against its line of credit, the cash account balance is increased and notes payable are increased. A bank overdraft occurs when a bank account is overdrawn due to withdrawals and cheques in excess of deposit amounts. In this case, the cash account will show a credit balance.
