Accounting ACCT 2610 Lecture Notes - Lecture 9: Finance Lease, Contingent Liability, Operating Lease
1 Nov 2016
School
Department
Course
Professor
Document Summary
Liabilities defined and classified: businesses finance the acquisition of their assets from two external sources. Current liabilities are short-term obligations that will be paid within the current operating cycle or one year: liquidity is ac company"s ability to pay current obligations. Current liabilities: transactions made on credit are placed into the accounts payable liability account. Accounts payable turnover = cost of goods sold / average accounts. Measures how quickly management is paying trade accounts. Average age of payables = 365 / turnover ratio: accrued liabilities are expenses that have been incurred but have not been paid at the end of the accounting period. Employees have earned salaries that have not yet been payed. Ex. a businessman gets paid vacation time. Provide financial support to employees who lose their jobs through no fault of their own. Cash (-a: when a company borrows money formally, their debt goes into the notes.
