Ch. 9 (Accounting for Current Liabilities)

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8 Terms

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Current liabilities

Everything due within one yr. (A/P, unearned rev., N/P, sales tax pay)

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Long-term liabilities

Opposite of current liabilities.

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Short-term notes payable

Borrow money for a short-term & company convert A/P 2 not pay. To have more time to pay ; yet they have to pay extra (taxes or interest ?)

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Interest expense formula

Notes payable X % X (Days divided 360)

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Times Interest earned formula

Income before interest exp. & income taxes / Interest exp.

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Payroll liabilities

Your salaries etc. are leveled on the employer (like taxes)

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Employers are responsible for…

…Taxes (their own shares)

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Internal control of payroll

For confidential & to avoid fraud