ACC chapter 8
Amount of note payable × annual interest rate × fraction of the year.
Interest on debt
current portion of long term debt
debt that will be paid within one year from the balance sheet date
interest =
face value(principal) x annual interest rate x time
we pay interest expense in the period we
incur interest rather then when we pay it
note payable (borrower)
liability that creates interest expense
notes payable is a
note signed by a company promising to repay the borrowed amount plus interest
FICA and FUTA.
payroll taxes
assets represents
probable future benefits
revenue recognition
recording/reporting of revenues at the appropriate time
Payroll withholdings are
the items subtracted from an employee's gross pay to arrive at take-home pay
Tax collected on sales is classified as a(n)
current liability
Which of the following are payroll withholdings that are subtracted from gross pay to arrive at take-home pay?
-Employee contributions to retirement plans -Federal income taxes -Health insurance paid by the employee
employee payroll costs
-Federal and state income taxes -Employee portion of FICA (Social Security and Medicare, 7.65%) -Employee contributions for health, dental, disability, and life insurance -Employee investments in retirement or savings plans
employer payroll costs
-Federal and state unemployment taxes -Employer portion of FICA (Social Security and Medicare, 7.65%) matching -Employer contributions for health, dental, disability, and life insurance -Employer contributions to retirement or savings plans
contingent liabilities is recorded only if
-a loss is probable -the amount is reasonably estimable
Which of the following may be classified as contingent liabilities?
-future litigation losses -frequent flyer program rewards -product warranties
Notes Payable
A written promise made by the business to pay a debt and interest in the future.
Fringe benefits
Additional employee benefits paid for by the employer (health, dental, disability, life insurance, retirement and saving plans)
Accounts Payable
Amounts to be paid in cash in the future for goods or services already gotten
Mixture of liabilities and equity a business uses.
Capital structure
Long-term debt maturing within one year.
Current portion of long-term debt
A liability that is created when cash is received in advance of the sale/service.
Deferred revenue
Payment amount is reasonably possible and is reasonably estimable
Disclosure of a contingent liability
An IOU promising to repay the amount borrowed plus interest.
Note payable
liabilities represents
Probable future sacrifices
Payment amount is probable and is reasonably estimable.
Recording of a contingent liability
sales tax payable
Sales tax collected from customers by the seller, representing current liabilities payable to the government
Classifying liabilities as either current or long-term helps investors and creditors assess this
The riskiness of a business's obligations
liability is
an obligation of a company to pay someone or something back
contingent liabilities
an uncertain situation that might result in a loss depending on the outcome of a future event
Notes Receivable (lender)
asset that creates interest revenue
Deferred revenues and sales tax payable typically are reported as
current liabilities
sales tax collected from customers by the seller represents
current liabilities payable to the government
