Current and Long-Term Liabilities and Their Characteristics

These flashcards cover key concepts related to current and long-term liabilities, accounting principles, and financial statements.

Current Liabilities

Obligations that are expected to be settled within one year or one operating cycle.

Long-Term Liabilities

Obligations that are due beyond one year or one operating cycle.

Contingent Liabilities

Possible obligations that may arise based on the outcome of a future event.

Debt-to-Equity Ratio

A financial measure used to assess a company’s financial leverage, calculated by dividing total liabilities by shareholders' equity.

Adjusting Entries

Journal entries made at the end of a reporting period to allocate income and expenses to the appropriate periods.

Deferral of Expenses

Recognizing an expense in the accounts at a later date than when it was incurred.

Deferral of Revenues

Recognizing revenue as earned at a later date than when cash was received.

Accrued Expenses

Expenses that are recognized before cash payment is made.

Accrued Revenues

Revenues that are recognized before cash is received.

Short-Term Notes Payable

Written promissory notes that companies must pay within one year.

Par Bonds

Bonds that are issued at face value.

Discount Bonds

Bonds that are sold for less than par value.

Premium Bonds

Bonds that are sold for more than par value.

Retirement of Bonds

The process of paying off bond liabilities before their maturity date.