ACCT 2101 Chapter Notes - Chapter 9: Deferred Income, Finance Lease, Operating Lease
Document Summary
Liabilities: probable future sacrifice of economic benefits that arise from past transactions. Interest on liabilities isn"t recorded as the original cost of the liability. Those expected to be paid within one year of the balance sheet date with current assets. Accounts payable/trade accounts payable happen when purchases are made on credit with cash payments to come at a later date. Good way to conserve cash for as long as possible. Accounts payable turnover ratio used to see how effectively a company manages the accounts payable. Average ap = (beg ap + end ap)/2. Higher ap turnover ratio means that a company is paying its suppliers in a timely manner. Accrued liabilities: expenses that have been incurred before the end of an accounting period but have not been paid in that accounting period. Companies must pay taxes on the income that they earn; can be federal, state, local and foreign tax. At the end of an accounting period, employees have typically.
