Chapter 10: Liabilities Review

A set of flashcards to review key vocabulary and concepts related to liabilities in financial accounting.

Liabilities

Obligations created when a company buys goods on credit, obtains short-term loans, or issues long-term debt.

Current Liabilities

Short-term obligations that will be paid with current assets within one year or the operating cycle.

Accounts Payable

A liability incurred when purchasing goods or services on credit.

Accrued Liabilities

Liabilities that include unpaid wages, utilities, and other expenses owed after a period of time.

Payroll Taxes Payable

Liabilities from the employer’s obligation to pay payroll taxes on employee earnings.

Income Tax Liability

The amount a corporation must pay in taxes on its taxable income.

Notes Payable

Written promises to pay a certain amount owed at a future date.

Sales Tax Payable

A liability arising from collecting sales tax from customers due to the state.

Deferred Revenue

A liability representing cash received before services are provided.

Long-Term Liabilities

Obligations that are due beyond one year, such as long-term notes payable and bonds.

Bonds Payable

Debt securities representing a loan made by investors to a borrower, typically used by corporations.

Contingent Liabilities

Potential liabilities that may occur depending on the outcome of a future event.

Debt-to-Assets Ratio

A financial ratio that indicates the proportion of a company's total assets that are financed by liabilities.

Times Interest Earned Ratio

A ratio used to measure a company's ability to meet its debt obligations.