Home > Flashcards > Accounting > Chapter 9

Details Title: Chapter 9 Description: Flashcards accompany notes from 10/25 and 10/27 Total Flash Cards: 18 Created: 10/25/2006 17:49:50	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term Current Liability Definition Due within operating cycle or 1 year, whichever is longer. All liabilities due beyond the cycle are long-term by default. Term Three categories of Current Liabilities Definition 1. Definitely Determinable 2. Estimated Liabilities 3. Contingent Liabilities Term Two criteria definitely determinable liabilities must meet: Definition 1. set by contract or law 2. subject to precise measurement (can determine a true value of the liability) Term Kinds of definitely determinable liabilities: 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 Term Accounts Payable Definition Acquired in ordinary course of business with an implied contract under federal law Term Loans Definition Must sign a note which is a contract. Pay interest on full amount of loan. Term Lines of Credit 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. Term Commercial Paper 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. Term Dividends Payable Definition Legal liabilities that must be paid by a company to its stockholders. Term Sales Taxes Payable 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. Term Vender's Compensation 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). Term Current Portion of Long-term Debt 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. Term Unearned Revenues Definition Prepayments 90% of prepaid items are short-term debt. Can be current or long-term (ex. a prepaid 3-year magazine subscription) Term Payroll Liabilities (7) 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) Term Trust Fund Liabilities Definition 1. Federal Withholding 2. FICA 3. Medicare Withheld from wages...paid to U.S. Treasury Term Estimated Liabilities (definition) Definition Subject to reasonable estimation...i.e. amount payable is questionable Term Estimated Liabilities (three examples) Definition 1. Income taxes payable 2. Property taxes payable 3. Warranty payable Term Contingent Liabilities (definition) 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.