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