BUS 251 Chapter Notes - Chapter 9: Gift Card, Current Liability, Unemployment Benefits

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Bank assesses company"s ability to repay short-term debts & est short-term loan limit that it feels reasonable. Provides company w/ greater flexibility & freedom to take advantage of business opportunities/settle debts. Working capital = amount by which company"s current assets exceed its current liabilities. Usu guaranteed (secured) by company"s a/r, inventory, or both. Lender lends company funds based on amount of a/r & inventory. I. e. 60% of a/r and 70% of inventory. Collateral = assets pledged as security for debts. Current portion of long-term debt = when long-term loan has portion of principal that is due w/in next year. This portion represented as current liability rather than lt liability. Trade accounts payable/trade payables = a/p from when company buys goods/services on credit. A/p thought of as free debt b/c usually does not carry explicit interest charges for length of credit period. Unearned revenue is liability b/c company receiving payment has obligation to provide related goods/services.