[ACCT 201] - Final Exam Guide - Ultimate 24 pages long Study Guide!
29 Nov 2016
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Current liabilities are obligations that the company is to pay within the next year or operating cycle, whichever is longer. Ex:accounts payable, salaries and wages payable, notes payable, interest payable, and income taxes payable. Current assets are assets that a company expects to convert to cash or use up within one year or its operating cycle, whichever is longer. In illustration 2-2, franklin corporation had current assets of ,100. For most businesses, the cutoff for classification as current assets is one year from the balance sheet date. For example, accounts receivable are current assets because the company will collect them and convert them to cash within one year. Supplies is a current asset because the company expects to use the supplies in operations within one year. Property, plant, and equipment are assets with relatively long useful lives that are currently used in operating the business. This category includes land, buildings, equipment, delivery vehicles, and furniture.
