Chapter 8 Key Words Flashcards
An obligation of a company to transfer some economic benefit in the future.
liability
Written promises to repay amounts borrowed plus interest.
notes payable
An informal agreement that permits a company to borrow up to a prearranged limit without having to follow formal loan procedures and prepare paperwork.
line of credit
A tax to cover federal and state unemployment costs paid by the employer on behalf of its employees.
unemployment taxes
Additional employee benefits paid for by the employer.
fringe benefits
Cash received in advance from a customer for products or services to be provided in the future.
deferred revenue
The point in time when gift cards expire or when the likelihood of redemption by customers is viewed as remote.
gift card breakage
Sales tax collected from customers by the seller, representing current liabilities payable to the government.
sales tax payable
Debt that will be paid within one year from the balance sheet date.
current portion of long-term debt
Uncertain situations that can result in a gain or a loss for a company.
contingencies
An existing uncertain situation that might result in a loss.
contingent liability
An existing uncertain situation that might result in a gain
contingent gain
Having sufficient cash (or other assets convertible to cash in a relatively short time) to pay currently maturing debts.
liquidity
The difference between current assets and current liabilities.
working capital
Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities.
current ratio
Cash, current investments, and accounts receivable divided by current liabilities; measures the availability of liquid current assets to pay current liabilities.
acid test ratio (quick ratio)
An agreement between a borrower and a lender requiring certain minimum financial measures be met or the lender can recall the debt.
debt covenant
