BUS 251 Chapter Notes - Chapter 9: Revolving Credit, Current Liability, Accounts Payable
4 Apr 2018
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Important to determining current financial health and what needs to be done to ensure long-term viability. What current liabilities arise from transactions with suppliers: trade (accounts) payable: accounts payable that occur when a company buys goods or services on credit, usually a short credit period 30 to 60 days. What are accounts payable sometimes considered free debt: they do not carry explicit interest charges, there is sometimes a discount for early payment or a penalty for late payment -> almost equivalent to interest. How are unearned revenues accounted for: unearned revenues only arise when a customer has made a payment in advance of receiving goods or services. At the time of payment in advance by customer: At the time the service is provided by the company: How are the liabilities related to gift cards and loyalty programs accounted for: gift cards remain a liability until the cards are redeemed, initial sale: Cr unearned revenue (gc liability) xxx: redemption (for goods):
