COMMERCE 1AA3 Chapter Notes - Chapter 0: Contingent Liability, Promissory Note, Capital Structure
7 Jan 2017
School
Department
Course
Professor
Document Summary
Business finance acquisition of assets by 1) debts 2) equity (finance by owners: mix of two is called capital structure, debt financing cheaper but riskier because interest payments are legal obligations and creditors can force bankruptcy. Present obligation which entails settlement of future transfer. Obligation arises from transaction/event which already occurred. Current liabilities obligations due within a year known & estimated amounts. Portion of long-term debt maturing within 12 months from the balance sheet date is reported as a current liability. Shouldn"t (cid:271)e reported as (cid:272)urrent lia(cid:271)ilities if: retired by assets not classified as current assets, refinanced or retired by new issues of debt, converted into share capital. Businesses collect sales taxes on behalf of cra then remit cheque back. In between this time, sales tax liability must be kept on the books. Accrued monthly: property taxes expense xxx. Expenses incurred but not yet paid: salaries & wages payable, interest payable.
