Ch. 9 (Accounting for Current Liabilities)

Current liabilities

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

Long-term liabilities

Opposite of current liabilities.

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 ?)

Interest expense formula

Notes payable X % X (Days divided 360)

Times Interest earned formula

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

Payroll liabilities

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

Employers are responsible for…

…Taxes (their own shares)

Internal control of payroll

For confidential & to avoid fraud