BU127 Study Guide - Final Guide: Deferred Income, Cash Flow, Current Liability
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BU127 Full Course Notes
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Document Summary
Acquisition of assets is financed from two sources: debt: funds from creditors. A mix of the two is capital structure. Liabilities recorded at their current cash equivalent, cash amount creditor would accept. Income tax payable, payroll liabilities and employee deduction. Notes payable: the time value of money is interest that is associated with the use of money over time. Interest = principle x interest rate x time. Deferred revenue: have been collected but not earned. Provision: the amount or timing of liability is uncertain. The following must be met: present obligation, cash will be required to settle, reliable estimate. Estimated warranties, closing of store, restructuring of the production or sales. Journal: debit cash and credit sales revenue, debit warranty expense and credit provisions for product warranty. If paid in warranty costs: debit: provision for warranty an credit cash. Contingent liabilities: possible liability that is created as a result of a past event.
