BU397 Lecture Notes - Lecture 16: Retained Earnings, Interest Bearing Note, Current Liability
Document Summary
A liability is listed as current if one of the following is met: Due within 12 months of from the end of the reporting period. Generally an agreement entered with the bank that allows multiple borrowings up to a negotiated limit. Repayments are made whenever there are sufficient funds available. Amount borrowed is reported on the balance sheet: availability of funds and restrictions imposed by the financial institution requires note disclosure. Amounts owed for goods, supplies, or services purchased on open account. The liability is recorded when the title has passed. Promises to pay a sum of money on a specified future date. Arises from purchases, financing, or other transactions. Notes payable are either short-term or long-term. In both cases, interest is determined whenever financial statement are prepared. The difference between the pv of the note and the face value of the note represents the discount on the note payable: this discount is the related interest.
