COMM-1107EL Chapter Notes - Chapter 9: Debits And Credits, Operating Lease, Credit Risk
14 Mar 2017
School
Department
Course
Professor
Document Summary
Current liabilities are obligations due within one year, or within the company"s normal operating cycle if it is longer than one year: current liabilities are of two kinds known amounts, and estimated amounts. Companies sometimes need to borrow money on a short-term basis to cover temporary shortfalls in cash needed to run their businesses. A line of credit allows a company to access credit on an as-needed basis up to a maximum amount set by the lender. Amounts owed for products or services purchased on credit are accounts payable. An accrued liability results from an expense the business has incurred but has not yet been billed for or paid. Therefore, an accrued expense creates a liability, which explains why it is also called an accrued expense. Short-term notes payable are notes payable due within one year. Interest expense must be accrued at the end of each reporting period.
