current liabilities
1. What are current liabilities?
Current liabilities are obligations of the firm that will be satisfied within one year or operating cycle, whichever is longer, by using a current asset or assuming a current liability.
Explain how to determine if currently maturing debt should be classified current or long-term.
Currently maturing debt is classified based on how the debt will be satisfied. If current assets are to be used or current liabilities are to be incurred, then it is classified as "current." If long-term investment (sinking fund investments), capital stock (conversion) or new debt issues (refinancing), then the debt is classified as long-term. Current liabilities are resolved using current assets or current liabilities.
8. Explain estimated liabilities.
Estimated liabilities are created when a firm makes a general offer of goods or services but the acceptance of the contract is based on a future contingency
3. In what ways are notes payable different from accounts payable?
Notes payable are different from accounts payable in two ways. Notes have stated interest rates and require a separate legal contract for each transaction.
7. What do payroll taxes and withholding taxes have in common?
Payroll taxes and withholding taxes are both custodial amounts that the firm collects and remits to the appropriate taxing agency.
6. What is the difference between payroll taxes and withholding taxes?
Payroll taxes are a surcharge that the firm pays on the dollar value of its payroll, while withholding taxes are employees' taxes on their income that the firm remits to the appropriate taxing agency.
4. What accounting issues must be recognized when collecting sales taxes?
Sales taxes are collected for the state government and are a current liability. Even in gross receipts, the sales taxes payable need to be considered.
5. What are unearned revenues?
Unearned revenues are liabilities created when a firm collects money from customers or clients before they deliver goods or perform services.
