Accounting Chapter 8 Learn Smart

what are some fringe benefits provided by employers to their employees?

contributions to retirement and other savings accounts, payment of insurance premiums on employees behalf, and reduced or no-cost company-provided services

current ratio equals

current assets divided by current liabilities

working capital equals

current assets minus current liabilities

this type of liability is normally payable within one year

current liability

additional benefits such as health insurance, retirement benefits, or life insurance that are paid by the employer

fringe benefits

this is sometimes called the "rent" paid by the borrower for using a lender's money

interest

an existing uncertainty that might result in a gain

contingent gain

Taxes collected for taxing authorities are recognized as

Current Liabilities

Tax collected on sales is classifies on the

balance sheet, as a liability

a probable future sacrifice of economic benefits arising from present obligations to transfer assets or provide services as a result of past transactions or events

liability

an informal agreement that permits a company to borrow up to a prearranged amount without having to follow formal loan procedures

line of credit

refers to a company's cash position and overall ability to obtain cash in the normal course of business

liquidity

this type of liability is normally payable more than one year from now

long-term liability

the time it takes to produce revenue is referred to as the company's

operating cycle

the formula for the acid-test or quick ration is

quick assets divided by current liabilities

The current portion of long-term debt is

the amount that will be paid within the next year

what is used as criteria to determine the reporting of a contingent liability?

the likelihood of future payment or loss

another name for the acid-test ratio is

the quick test ratio

What is the trend that is the source of the most commonly reported contingent liability?

warranties