Term
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Definition
Due within operating cycle or 1 year, whichever is longer.
All liabilities due beyond the cycle are long-term by default. |
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Term
| Three categories of Current Liabilities |
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Definition
1. Definitely Determinable
2. Estimated Liabilities
3. Contingent Liabilities |
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Term
| Two criteria definitely determinable liabilities must meet: |
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Definition
1. set by contract or law
2. subject to precise measurement (can determine a true value of the liability) |
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Term
| Kinds of definitely determinable liabilities: |
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Definition
1. accounts payable
2. loans/lines of credit
3. commercial papers
4. dividends payable
5. sales taxes payable
6. current portion of long-term debt
7. unearned revenues
8. payroll liabilities |
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Term
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Definition
| Acquired in ordinary course of business with an implied contract under federal law |
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Term
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Definition
Must sign a note which is a contract.
Pay interest on full amount of loan. |
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Term
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Definition
Must sign a general agreement, but not for definite amount.
i.e. credit issuer approves spending up to credit limit, but pay interest only on amount that has been spent. |
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Term
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Definition
Unsecured debt offered for sale by a company to the public.
Usually a relatively secure short-term investment if done with a stable company. |
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Term
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Definition
| Legal liabilities that must be paid by a company to its stockholders. |
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Term
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Definition
A store collects sales taxes for retail purchases only and gives that money to the state.
Smaller businesses pay monthly and larger businesses (e.g. Target, Walmart) prepay and adjust monthly. |
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Term
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Definition
| States allow a small percentage on each dollar of sales tax collected up to a specified amount (in GA, 3% up to $3000 and 1/2 of 1% thereafter) to be returned to the business (to pay for accounting fees). |
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Term
| Current Portion of Long-term Debt |
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Definition
Any portion of long-term debt due within the current cycle (ex. car payments due within the year).
Any amount owed beyond the current cycle becomes a long-term liability. |
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Term
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Definition
Prepayments
90% of prepaid items are short-term debt.
Can be current or long-term (ex. a prepaid 3-year magazine subscription) |
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Term
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Definition
1. Federal
2. FICA
3. Medicare
4. State Income Tax
5. Local Income Tax
6. Federal Unemployment Tax (FUTA)
7. State Unemployment Tax (SUTA) |
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Term
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Definition
1. Federal Withholding
2. FICA
3. Medicare
Withheld from wages...paid to U.S. Treasury |
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Term
| Estimated Liabilities (definition) |
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Definition
| Subject to reasonable estimation...i.e. amount payable is questionable |
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Term
| Estimated Liabilities (three examples) |
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Definition
1. Income taxes payable
2. Property taxes payable
3. Warranty payable |
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Term
| Contingent Liabilities (definition) |
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Definition
| A liability that is not known to exist. ex. If your company is on trial in a lawsuit you do not know whether or not you will have a liability until the verdict. |
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