COMM-1106EL Chapter Notes - Chapter 9: Canada Pension Plan, Unemployment Benefits, Remittance
6 Dec 2016
School
Department
Course
Professor
Document Summary
The definition of a liability is an item that will require the outflow or sacrifice of economic resources in the future to settle an obligation that exists as a result of a transaction that has already taken place. Current liabilities are those that the company expects to settle within the next 12 months. Since most current liabilities will be settled with cash, identifying them as current liabilities helps uses assess liquidity and enables them to determine how much cash will be required over the next year. Assessing liquidity enables users to determine whether the company will have sufficient cash available when its various liabilities come due (working capital) If the company"s available cash is insufficient, the company will have to go to outside sources taking on additional short-term or long-term debt, or issuing more shares in order to raise additional cash (negative working capital) At what amount are current liabilities reflected on the statement of financial.
