chapter 10 liabilities accounting

comapnines reccord obligations inthe form of written notes as what

Notes payable

why must companies monitor the relationship of current liabilities to current assets

The relationship is critical in evaluateing a companies short term debt paying ability. For example a company that has more current liabilities than current assets may not be able to meet its current obligations when they become due.

WNOtes payable usually require the buyer to pay what

interest

what are debts classified as that do not meet the current liabilty standards

long term liabilities

notes that are due within one year of the balance sheet date are classiffied as what

Current liabilities

What do current liabilities include

Current liabilities include notes payable, accounts payable and unearned revenues. they also include accurred liabilities such as taxes, salaries and wadges, and interest payable.

What is another reason as to why companies issue notes payable

to meet short term financeing needs

current liability

a debt that a company expects to pay within one year or the operating cycle whichever is longer

why are notes payable pften used over accounts payable

becuase they give the lender formal proof of the obligation in case legal remedies are needed to collect the debt.

provide the journal entry for the following illistration First national bank agrees to lend 100,000 on september 1 , 2015 if cole williams co. signs a 100,000, 12% , four month note maturing january 1,

cash 100,000 Notes payable 100,000 ( to reccord the issuance of 12% , 4 month note to first national bank)