Chapter 12 Current liabilities

Current Liabilities

Short-term financial obligations a company owes, typically due within one year or an operating cycle.

Accounts Payable

Money owed to suppliers for goods bought on credit.

Notes Payable

Loans with agreed repayment terms that may be short-term or long-term.

Taxes Payable

Money collected for or owed to governments, including sales and income taxes.

Employee Liabilities

Obligations like salaries, vacation pay, and bonuses owed to employees.

Unearned Revenue

Money received by a company for goods or services that haven't yet been delivered.

Premium Liability

Estimated obligation for future costs associated with premiums offered to customers.

Contingent Liability

A potential obligation that may occur depending on the outcome of an uncertain event.

Current Ratio

A liquidity ratio calculated as Current Assets divided by Current Liabilities.

Acid-Test Ratio

A more stringent liquidity ratio calculated as (Cash + Short-Term Investments + Net Accounts Receivable) divided by Current Liabilities.

Warranties

Estimated costs a company expects to pay for repairs on products sold with warranties.

Gain Contingency

A potential gain from an uncertain positive outcome, like winning a lawsuit, not recorded until certain.

Discount on Notes Payable

A contra account that represents the cost of borrowing when no interest is charged on a loan.