Chapter 9 - Liabilities

These flashcards cover key vocabulary related to liabilities, including definitions and explanations of various financial terms.

Current Liabilities

Obligations due within the coming year or the normal operating cycle, whichever is longer.

Accounts Payable

Amounts due to short-term creditors, typically non-interest bearing.

Notes Payable

Short-term formal notes that usually bear interest and have a fixed term.

Unearned Revenue

Cash received for a service or product that has yet to be provided or delivered.

Income Taxes Payable

Tax liability that a business has not yet paid to the applicable government.

Days Payable Outstanding (DPO)

It indicates the average number of days a firm takes to pay its accounts payable.

Times-Interest-Earned (TIE) Ratio

Indicates a company’s ability to make interest payments to its creditors.

Contingent Liabilities

Liabilities that depend on the likelihood of a future event occurring and the obligation's measurability.

Interest Expense

The cost incurred by an entity for borrowed funds.

Accrual of Interest Expense

Recording the interest that has been incurred but not yet paid.