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Financial Accounting definitions.docx

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Financial AccountingLmx 124 430 Exercise 21 solutions DefinitionsAccounts payable and accrued liabilities paid in next 12 months so recorded as current liabilities permanentAccounts receivable money that the client owes you within 12 months so considered current asset permanentAccumulated depreciationbuy machines buildings bring benefits and cost for this is paid over time and over time this money is depreciate reviewLong term asset permanentBuildings and leasehold improvements renovations in rents benefits over long period of time so long term asset permanent accountCommon sharesownership of company issue to people who want them shareholders so common shares part of equity Shareholder equity account PermanentCurrent maturities of long term debt capital portion of these payments over time will offset the amount that you owe so the payments that you make on long term debt over 12 months so current liabilitiespermanent accountDividends payableshareholders payment allocation of retained earnings distributed to shareholders will have to pay within short period of time probably date already declared to be paid recorded against shareholders equity If you declare them they will offset shareholders equity and will have debit balance because reduction of shareholders equity current balance all the time Goodwill asset for the company and will generate benefit over long period of time so long time asset and permanent accountIncome and other taxes payable current liability money owed to govt ex permanent accountIncome and other taxes receivable govt owe youif taxes paid in advance called installments didnt make as much profit as expected so govt will owe youso asset for company and permanent accountInventories asset but sell in short period of time so current asset and permanent accountInvestmentseither current asset or long term asset
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