Reporting and Analyzing Liabilities

Vocabulary flashcards based on Chapter 10 notes about reporting and analyzing liabilities, covering key terms and their definitions.

Current Liabilities

Liabilities expected to be paid or settled within one year or within the operating cycle.

Non-Current Liabilities

Liabilities not expected to be settled within one year; also referred to as long-term liabilities.

Interest-Bearing Liabilities

Indebtedness to a creditor through notes payable or bank loans, requiring the payment of principal and interest.

Bonds Payable

A promise to repay a specified amount at a fixed future date, along with periodic interest payments.

Deferred Revenue

Obligation settled through the provision of goods/services in the future, classified as a liability.

Payroll Deductions

Amounts withheld from employees' gross pay for taxes, benefits, and other purposes.

Contingent Liabilities

Possible obligations dependent on future events, not recorded but noted in financial statements.

Sales Tax Payable

Liability incurred from sales taxes collected on sales, to be remitted to the government.

Maturity

The date when a loan or bond is due to be repaid.

Amortization of Bond Premium or Discount

Allocating the bond premium or discount as interest expense over the life of the bond.

Operating Line of Credit

A pre-arranged agreement allowing a company to borrow up to an agreed limit to manage cash shortfalls.

Accrued Liabilities

Expenses that have been incurred but not yet paid, like salaries and interest.

Principal

The original amount borrowed or the face value of a loan or bond.

Liquidity

Ability to meet short-term obligations and unexpected cash needs.

Solvency

Ability to meet long-term obligations.

Note Payable

Written promissory note to pay a specific amount of money at a certain future date.

Interest Expense

Cost incurred by an entity for borrowed funds.