Trade Payables and Other Payables

Flashcards covering key vocabulary and concepts related to trade payables and borrowing in accounting.

Liability

A present obligation of the entity arising from past events, expected to result in an outflow of economic benefits.

Current Liabilities

Obligations due within one year, including trade payables, other payables, and short-term borrowings.

Trade Payables

Amounts owed to suppliers for goods or services purchased on credit.

Unearned Revenues

Revenue received in advance where cash is received before goods or services are provided.

Short-term Borrowings

Loans obtained that are due for repayment within an accounting period.

Current Portion of Long-term Borrowings

That part of long-term debt that is due within one year.

Overdraft

An arrangement where a business overdraws its bank account, subject to interest charges.

Journal Entry

A record of a financial transaction in the accounting records.

Interest Expense

The cost incurred by an entity for borrowed funds.

Mortgage

A legal agreement that protects a lender in case of non-payment by the borrower.

Bonds

A written promise by an issuer to pay the bondholders a specified amount of interest and the principal at maturity.

Principal

The amount of money borrowed or invested, which is to be repaid.

Accrued Interest

Interest that has accumulated since the last payment date but has not yet been paid.

Interest Rate

The percentage of the principal charged as interest by a lender.

Interest Calculation Formula

Interest = Rate % x Principal x Time (in months expressed as n/12).